中文（繁體）
中文（简体）
English
S4 Economics: Money and Banking Practice Paper 2
S4 Economics: Money and Banking Practice Paper 2
Ten items on reserve ratios and deposit creation: multiplier changes, excess reserves, central bank bond purchases and real interest rates, each with an answer and a one-line note.
Quick answer A 25 per cent ratio turns 800 dollars into 3,200 dollars, and a 5 per cent ratio gives a multiplier of twenty. Raising the ratio from 10 to 12.5 per cent cuts the maximum deposit on 1,000 dollars from 10,000 to 8,000.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 questions |
| Suggested time | 25 minutes |
| Difficulty mix | Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1 |
| Chapter | Chapter: S4 Economics: Money and Banking – Tutor Lesson Plan |
| Level | S4 |
02 Questions (10 items)
- FoundationThe required reserve ratio is 25 per cent and the public deposits 800 dollars, with no excess reserves. What is the maximum total deposit?
- FoundationWhen the required reserve ratio is 5 per cent, what is the simple deposit multiplier?
- FoundationBesides M1, which two kinds of deposits does M2 include?
- FoundationWith a 12.5 per cent reserve ratio, a customer deposits 2,400 dollars. What is the required reserve?
- IntermediateThe reserve ratio rises from 10 per cent to 12.5 per cent. From what figure to what figure does the maximum deposit on an initial 1,000 dollars fall?
- IntermediateThe nominal deposit rate is 6 per cent and inflation is 2.5 per cent. What is the real interest rate?
- IntermediateTotal deposits are 80,000 dollars, the reserve ratio is 15 per cent and actual reserves are 15,000 dollars. What are the required and excess reserves?
- ChallengeThe central bank buys 500 dollars of bonds in the open market and the reserve ratio is 20 per cent. What is the maximum new deposit created?
- ChallengeA 20 per cent ratio gives a theoretical multiplier of five, but cash held by the public lowers the actual multiplier to 4.5. How far below the theoretical figure is the final deposit from 1,000 dollars?
- Error redoA student mistakes the 25 per cent reserve ratio for a multiplier of 0.25 and says 1,200 dollars creates only 300 dollars. What is the correct figure?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | $3,200 | The multiplier is one divided by 0.25, which is four, so four times 800 is 3,200 dollars. |
| 2 | 20 | The multiplier is one divided by 0.05, which equals twenty. |
| 3 | Savings deposits and time deposits | M2 equals M1 plus savings deposits and time deposits, a broader measure of money. |
| 4 | $300 | The required reserve is 2,400 multiplied by 12.5 per cent, which is 300 dollars. |
| 5 | From $10,000 down to $8,000 | The multiplier falls from ten to eight, so the maximum deposit drops from 10,000 to 8,000 dollars. |
| 6 | 3.5 per cent | The real rate is roughly 6 per cent minus 2.5 per cent, which is 3.5 per cent. |
| 7 | Required reserves $12,000; excess reserves $3,000 | Required reserves are 12,000 dollars and the remaining 3,000 dollars is excess reserve. |
| 8 | $2,500 | The injected 500 dollars works through a multiplier of five, giving 2,500 dollars of new deposits. |
| 9 | $500 lower | The theoretical value is 5,000 dollars and the actual value is 4,500 dollars, a gap of 500 dollars. |
| 10 | $4,800 | The multiplier is the reciprocal of the reserve ratio, so four times 1,200 is 4,800 dollars. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
Find a tutor freeTutor Registration →
Questions and answers are written originally by the TutorZone team and are not taken from any school, publisher or examination authority paper. Every value is checked by computer.
