Exam 15: The Money Supply Process

If reserves in the banking system increase by $100, then chequable deposits will increase by $2000 in the simple model of deposit creation when the desired reserve ratio is ________.

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

A bank has excess reserves of $1000 and demand deposit liabilities of $80000 when the reserve requirement is 25 percent. If the reserve requirement is lowered to 20 percent, the bank's excess reserves will be ________.

If the desired reserve ratio is 20 percent, the simple deposit multiplier is ________.

The interest rate the Bank of Canada charges banks borrowing from the Bank is the ________.

During the bank panics of the Great Depression the excess reserve ratio ________.

When the Bank of Canada sells $100 worth of bonds to First National Bank, reserves in the banking system ________.

In the simple model of multiple deposit creation in which banks do not hold excess reserves, the increase in chequable deposits equals the product of the change in excess reserves and the ________.

The formula for the simple deposit multiplier can be expressed as ________.

Assuming initially that r = 10 percent and c = 40 percent, a decrease in r to 5 percent causes ________.

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

High-powered money minus reserves equals ________.

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

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds. If the proceeds are kept in ________, the open market purchase has no effect on reserves; if the proceeds are kept as ________, reserves increase by the amount of the open market purchase.

If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable deposits are $900 billion, then the money supply is ________.

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

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

A bank has no excess reserves 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 now be ________.

If a person selling bonds to the Bank of Canada cashes the Bank's cheque, then reserves ________ and currency in circulation ________, everything else held constant.

A bank has excess reserves of $4000 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 ________.