Exam 14: The Money Supply Process

Of the three players in the money supply process,most observers agree that the most important player is

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,nine million dollars in excess reserves,and faces a required reserve ratio of ten percent.Given this information,we can say First National Bank has ________ million dollars in required reserves.

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the currency ratio is

The Fed does not tightly control the monetary base because it does not completely control

The M2 money supply is represented by

High-powered money minus currency in circulation equals

Assuming initially that rr = 15%,c = 40%,and e = 5%,a decrease in e to 0% causes the M1 money multiplier to ________,everything else held constant.

The monetary liabilities of the Federal Reserve include

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

Total reserves minus bank deposits with the Fed equals

The Fed's holdings of securities consist primarily of ________,but also in the past have included ________.

In the early 1930s,the currency ratio rose,as did the level of excess reserves.Money supply analysis predicts that,everything else held constant,the money supply should have

Both ________ and ________ are Federal Reserve assets.

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 M1 money multiplier is

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,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 on deposit with the Federal Reserve.

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

Assuming initially that rr = 15%,c = 40%,and e = 5%,an increase in e to 10% causes the M1 money multiplier to ________,everything else held constant.

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

When the Fed buys $100 worth of bonds from First National Bank,reserves in the banking system

All else the same,when the Fed calls in a $100 discount loan previously extended to the First National Bank,reserves in the banking system