Exam 22: Money and Inflation

One of the main reasons the U.S. Treasury is redesigning dollar bills (such as the $10, $20, and $50 denominated bills) is so that they are more difficult to counterfeit.

The Federal Reserve

For a bank to make a profit, the interest rate on its deposit liabilities must be higher than the interest rate on its loan receipts.

The most efficient form of money is checking accounts.

Which of the following are a liability for a bank?

Suppose banks desire to keep 5 percent of all deposits on reserve, and the Fed purchases $10 million of government securities from a private securities dealer. Then,

Many of the current controversies about money pertain to

An individual who claims she is making a lot of money is using the word money according to the definition of the word used in economics.

Open market operations refer to the buying or selling of bonds by the central bank.

Suppose the required reserve ratio is 10 percent, and banks hold no excess reserves. If the Fed purchases $10 million worth of government bonds from Bank C, the amount of loans held by Bank C will

Money is always a good store of value.

Does the Federal Reserve have complete control over the money supply at all times? Why or why not?

Answer true or false, and explain.

The buying and selling of bonds by the Fed to change bank reserves is referred to as

Throughout history, the most common form of commodity money has been

Suppose banks desire to keep 5 percent of all deposits on reserve, and the Fed sells $10 billion of government securities to Bank A. As a result,

When the German hyperinflation stabilized at the end of 1923,

One of the most important principles of macroeconomics is that excessive decreases in the supply of money cause inflation.

If real GDP depends only on capital, labor, and technology, an increase in the money supply will lead to

The reserve ratio was nearly constant for several years but then increased sharply in the fall of 2008.