Exam 14: The Money Supply Process

If the required reserve ratio is 15 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the M1 money multiplier is

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

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 nine million dollars in excess reserves.Given this information,we can say First National Bank faces a required reserve ratio of ________ percent.

The equation that represents M2 in the model of the money supply process is

The formula that links checkable deposits to the monetary base is

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 nine million dollars in excess reserves.Given this information,we can say First National Bank has ________ million dollars in required reserves.

Which is the most important category of Fed assets?

An increase in the monetary base that goes into ________ is not multiplied,while an increase that goes into ________ is multiplied.

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 money supply is ________ billion.

An increase in ________ leads to an equal ________ in the monetary base in the short run.

When the Treasury acquires gold or SDRs,it issues certificates to the ________,which are a claim on the gold or SDRs,and in turn is credited with deposit balances at the ________.

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

If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of

Everything else held constant,a decrease in holdings of excess reserves will mean

When the Federal Reserve extends a discount loan to a bank,the monetary base ________ and reserves ________.

When the Fed supplies the banking system with an extra dollar of reserves,deposits ________ by ________ than one dollar-a process called multiple deposit creation.

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

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

Factors causing an increase in currency holdings include

Subtracting borrowed reserves from the monetary base obtains