Exam 14: The Money Supply Process

The interest rate the Fed charges banks borrowing from the Fed is the

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

An increase in U.S.Treasury deposits at the Fed reduces both ________ and the ________.

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

The monetary base declines when

If the required reserve ratio is 5 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

The volume of loans that the Fed makes to banks is affected by the Fed's setting of the interest rate on these loans,called the

The total amount of required reserves in the banking system is equal to the ________ the required reserve ratio and checkable deposits.

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

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

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

The relationship between borrowed reserves,the nonborrowed monetary base,and the monetary base is

In the model of the money supply process for M2,the relationship between checkable deposits and the M2 money supply is represented by

Everything else held constant,an increase in the required reserve ratio will result in ________ in M1 and ________ in M2..

When banks borrow money from the Federal Reserve,these funds are called

An assumption in the model of the money supply process is that the desired levels of currency and excess reserves

Decisions by depositors to increase their holdings of ________,or of banks to hold excess reserves will result in a ________ expansion of deposits than the simple model predicts.

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

Assuming initially that rr = 10%,c = 40%,and e = 0,a decrease in rr to 5% causes the M1 money multiplier to ________,everything else held constant.

The simple deposit multiplier can be expressed as the ratio of the