Exam 17: The Money Supply Process

Suppose the banking system holds no excess reserves. If the required reserve ratio is 0.10 and the money multiplier is 2.5, what is the value of the currency-deposit ratio?

If banks do not hold excess reserves, the multiple deposit expansion process ends when

When the spread between the T-bill rate and the discount rate increases

Reserves equal

The anonymity premium refers to

Although open market operations and discount loans both change the monetary base, the Fed has

Virtually all of the growth of the monetary base is caused by

If the Fed purchases $1 million in securities from the nonbank public, the monetary base will rise by $1 million

During the last 20 years, the M1 money multiplier

A $10 million open market sale will decrease the monetary base by

Suppose that the banking system currency has no excess reserves and that a bank receives a deposit into a checking account of $10,000 in currency. If the required reserve ratio is 0.20, what is the maximum amount that the banking system can lend out?

The increase in the currency-to-deposit ratio during the 1960s was probably due to

The difference between currency outstanding and currency in circulation is equal to

A rise in market interest rates

During 1985 and 1986 the money multiplier

Suppose a bank with no excess reserves buys Treasury securities from the Fed. In order to raise the additional funds necessary to meet its reserve requirements the bank may

Which of the following equations is correct?

If the Fed purchases $50,000 in T-bills from a bank, by how much will the bank's excess reserves increase?

As of July 2006, the value of currency in circulation was about

Which of the following equations is correct?