Exam 14: The Money Supply Process

If the required reserve ratio is 15 percent,the simple deposit multiplier is

The monetary base consists of

If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has total reserves of

Everything else held constant,an increase in the required reserve ratio on checkable deposits will cause

The increase in the availability of ATM's has caused the cost of acquiring currency to ________ which will cause the currency ratio to ________,everything else held constant.

Explain the complete formula for the M1 money supply,and explain how changes in required reserves,excess reserves,the currency ratio,the nonborrowed base,and borrowed reserves affect the money supply.

The money supply is ________ related to the nonborrowed monetary base,and ________ related to the level of borrowed reserves.

When the Fed supplies the banking system with an extra dollar of reserves,deposits increase by more than one dollar-a process called

There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.

Special Drawing Rights (SDRs)are issued to governments by the ________ to settle international debts and have replaced ________ in international transactions.

The formula linking the money supply to the monetary base is

When the Fed purchases artwork to decorate the conference room at the Federal Reserve Bank of Kansas City,

In the simple deposit expansion model,if the required reserve ratio is 10 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

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 money supply is ________ billion.

If a bank has excess reserves of $15,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has total reserves of

U.S.Treasury deposits at the Fed are ________ for the Fed but ________ for the Treasury.Thus an increase in U.S.Treasury deposits ________ the monetary base.

The monetary base increased by 20% during the contraction of 1929-1933,but the money supply fell by 25%.Explain why this occurred.How can the money supply fall when the base increases?

Assume that no banks hold excess reserves,and the public holds no currency.If a bank sells a $100 security to the Fed,explain what happens to this bank and two additional steps in the deposit expansion process,assuming a 10% reserve requirement.How much do deposits and loans increase for the banking system when the process is completed?

During the 2007-2009 financial crisis the currency ratio

If a member of the nonbank public purchases a government bond from the Federal Reserve in exchange for currency,the monetary base will ________,but reserves will ________.