Exam 14: The Money Supply Process

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

If reserves in the banking system increase by $100,then checkable deposits will increase by $1000 in the simple model of deposit creation when the required reserve ratio is

When a member of the nonbank public deposits currency into her bank account,

The M2 money multiplier is

Everything else held constant,an increase in the excess reserves ratio causes the M1 money multiplier to ________ and the money supply to ________.

Suppose your payroll check is directly deposited to your checking account.Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

The Fed can exert more precise control over ________ than it can over ________.

Since the Federal Reserve sets the required reserve ratio to less than one,one dollar of reserves can support ________ of checkable deposits.

The increase in the currency ratio during World War II was due to

In the model of the money supply process,the depositor's role in influencing the money supply is represented by

Explain two ways by which the Federal Reserve System can increase the monetary base.Why is the effect of Federal Reserve actions on bank reserves less exact than the effect on the monetary base?

The ratio that relates the change in the money supply to a given change in the monetary base is called the

Everything else held constant,an increase in the money market fund ratio will result in ________ in the M1 money multiplier and ________ in the M2 money multiplier.

In the simple deposit expansion model,if the required reserve ratio is 20 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

The excess reserves ratio is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

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 in excess reserves.

If the required reserve ratio is 15 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

A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve requirement is 20 percent.If the reserve requirement is lowered to 10 percent,the bank's excess reserves will be

Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply.

Explain why the simple deposit multiplier overstates the true deposit multiplier.