Exam 14: The Money Supply Process

Models describing the determination of the money supply and the Fed's role in this process normally focus on ________ rather than ________,since Fed actions have a more predictable effect on the former.

Which of the following are not liabilities on the Fed's balance sheet?

Suppose that from a new checkable deposit,First National Bank holds eight million dollars on deposit with the Federal Reserve,one million dollars in required reserves,and faces a required reserve ratio of ten percent.Given this information,we can say First National Bank has ________ million dollars in excess reserves.

Purchases and sales of government securities by the Federal Reserve are called

If the Fed injects reserves into the banking system and they are held as excess reserves,then the money supply

Explain two reasons why the Fed does not have complete control over the level of bank deposits and loans.Explain how a change in either factor affects the deposit expansion process.

High-powered money minus reserves equals

If the required reserve ratio is equal to 10 percent,a single bank can increase its loans up to a maximum amount equal to

Suppose a person cashes his payroll check and holds all the funds in the form of currency.Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

The formula for the simple deposit multiplier can be expressed as

Everything else held constant,a decrease in the required reserve ratio on checkable deposits will mean

When an individual sells a $100 bond to the Fed,she may either deposit the check she receives or cash it for currency.In both cases

In the simple deposit expansion model,a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed

A simple deposit multiplier equal to one implies a required reserve ratio equal to

Everything else held constant,an increase in the required reserve ratio on checkable deposits causes the M1 money multiplier to ________ and the money supply to ________.

Everything else held constant,an increase in the excess reserve ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply.

If the required reserve ratio is 20 percent,the simple deposit multiplier is

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the currency ratio is

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds.If the proceeds are kept in ________,the open market purchase has no effect on reserves; if the proceeds are kept as ________,reserves increase by the amount of the open market purchase.

A bank has excess reserves of $4,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent.If the reserve ratio is raised to 25 percent,the bank's excess reserves will be