Exam 15: The Money Supply Process

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

If reserves in the Bank of Canada increase by $100, then chequable deposits will increase by $400 in the simple model of deposit creation when the desired reserve ratio is ________.

How changes in the nonborrowed monetary base affect the money supply?

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the monetary base is ________.

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the money supply is ________.

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

Explain two ways by which the Bank of Canada can increase the monetary base. Why is the effect of Bank of Canada actions on bank reserves less exact than the effect on the monetary base?

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

If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable deposits are $900 billion, then the level of excess reserves in the banking system is ________.

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the currency ratio is ________.

If the desired reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to ________.

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 currency ratio is ________.

If reserves in the banking system increase by $100, then chequable deposits will increase by $1000 in the simple model of deposit creation when the desired reserve ratio is ________.

Suppose a person cashes his payroll cheque and holds all the funds in the form of currency. Everything else held constant, total reserves in the banking system ________ and the monetary base ________.

Explain what happens to the money multiplier and the money supply when depositor behaviour causes c to increase with all other variables remaining the same.

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

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

A simple deposit multiplier equal to four implies a desired reserve ratio equal to ________.

Everything else held constant, a decrease in the desired reserve ratio will mean ________.

If a bank has excess reserves of $5000 and demand deposit liabilities of $80000, and if the reserve requirement is 20 percent, then the bank has actual reserves of ________.