Exam 15: The Money Supply Process

Subtracting borrowed reserves from the monetary base obtains ________.

When banks borrow money from the Bank of Canada, these funds are called ________.

Assuming initially that r = 10 percent and c = 40 percent, an increase in r to 15 percent causes ________.

The government agency that oversees the banking system and is responsible for the conduct of monetary policy in Canada is ________.

If a bank has excess reserves of $15000 and demand deposit liabilities of $80000, and if the reserve requirement is 20 percent, then the bank has total reserves of ________.

A bank has excess reserves of $10000 and demand deposit liabilities of $100,000 when the desired reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves will be ________.

The three players in the money supply process include ________.

If the money supply is equal to $400 billion and the monetary base is equal to $100 billion, the money multiplier is equal to ________.

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

In the simple deposit expansion model, a decline in chequable deposits of $1000 when the desired reserve ratio is equal to 20 percent implies that the Bank of Canada ________.

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $800 billion, and excess reserves total $0.8 billion, then the excess reserves-chequable deposit ratio is ________.

When an individual sells a $100 bond to the Bank, she may either deposit the cheque she receives or cash it for currency. In both cases ________.

In the simple deposit expansion model, if the Bank of Canada purchases $100 worth of bonds from a bank that previously had no excess reserves, the bank can now increase its loans by ________.

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

If the desired reserve ratio is 10 percent, the simple deposit multiplier is ________.

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.

A decrease in ________ leads to an equal ________ in the monetary base in the short run.

Who are the three players in the money supply process? Describe their roles.

If the money multiplier is equal to 2 and the money supply is equal to $100 billion, the monetary base is equal to ________.

If a bank has excess reserves of $4000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of ________.