Exam 14: The Money Supply Process

The percentage of deposits that banks must hold in reserve is the

Everything else held constant,a decrease in the currency ratio will mean ________ in the M1 money multiplier and ________ in the M2 money multiplier.

The monetary base minus currency in circulation equals

In the simple deposit expansion model,if the Fed extends a $100 discount loan to a bank that previously had no excess reserves,the bank can now increase its loans by

The money supply is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

The two most important categories of assets on the Fed's balance sheet are ________ and ________ because they earn interest.

The formula for the M1 money multiplier is

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

In the simple deposit expansion model,an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed

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 monetary base 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 on deposit with the Federal Reserve.

If reserves in the banking system increase by $100,then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is

When a bank buys a government bond from the Federal Reserve,reserves in the banking system ________ and the monetary base ________,everything else held constant.

Suppose the Bank of China permanently decreases its purchases of U.S.government bonds and,instead,holds more dollars on deposit at the Federal Reserve.Everything else held constant,a open market ________ would be the appropriate monetary policy action for the Fed to take to offset the expected ________ in the monetary base in the United States.

When a member of the nonbank public withdraws currency from her bank account,

During the bank panics of the Great Depression the excess reserve ratio

If the Fed decides to reduce bank reserves,it can

Recognizing the distinction between borrowed reserves and the nonborrowed monetary base,the money supply model is specified as

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

The government agency that oversees the banking system and is responsible for the conduct of monetary policy in the United States is