Exam 15: The Money Supply Process

In the simple deposit expansion model, a decline in chequable deposits of $500 when the desired reserve ratio is equal to 10 percent implies that the Bank of Canada ________.

If a bank has excess reserves of $20000 and demand deposit liabilities of $80000, and if the reserve requirement is 20 percent, then the bank has total reserves of ________.

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

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, deposits in the banking system can potentially increase by ________.

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

Everything else held constant, an increase in currency holdings will cause ________.

If the desired reserve ratio is 15 percent, the simple deposit multiplier is ________.

Everything else held constant, a decrease in the currency ratio will mean ________ in the M2+ money multiplier.

When the monetary base is equal to $200 billion, the desired reserve ratio is 0.10 and the currency ratio is equal to 0.20, the money multiplier is equal to ________ and the money supply is equal to ________.

If reserves in the banking system increase by $100, then chequable deposits will increase by $500 in the simple model of deposit creation when the desired reserve ratio is ________.

The monetary liabilities of the Bank of Canada include ________.

In the model of the money supply process, the Bank of Canada's role in influencing the money supply is represented by ________.

In the early 1930s, the currency ratio in the United States rose, as did the level of excess reserves. Money supply analysis predicts that, all else constant, the money supply should have ________.

In the simple deposit expansion model, a decline in chequable deposits of $1000 when the desired reserve ratio is equal to 10 percent implies that the Bank of Canada ________.

The monetary base declines when ________.

The M2+ money multiplier is ________.

The two most important categories of assets on the Bank's balance sheet are ________ and ________ because they earn interest.

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 monetary base is ________.

The Bank does not tightly control the monetary base because it does not completely control ________.

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