Exam 8: Money, the Price Level, and Inflation

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

Which of the following is NOT a monetary policy tool of the Federal Reserve?

In Zealand, banks' desired reserve ratio is 20 percent and the currency drain also equals 20 percent. The money multiplier equals .

If the price level doubles, the

If the interest rate is low, people will want to hold a lot of money balances because the

Traveler's checks are included in M1 but not in M2.

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

In the money market, if the interest rate exceeds the equilibrium interest, there is a surplus of money. How is the surplus eliminated?

Suppose that M = 300, P = 150, and Y = 6. Then the velocity of circulation equals

Which of the following are part of a commercial bank's reserves? I. cash in the bank's vaults II. loans III. cash in checking accounts

Checking deposits at banks are

Whenever actual reserves exceed desired reserves, the bank

The Chairman of the Board of Governors of the Fed

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of an increase in financial innovation such as the introduction of ATMs?

If nominal GDP = $15 trillion and the quantity of money is $3 trillion, what is velocity?

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

The quantity theory of money is the idea that in the long run

What is the money multiplier and what affects its size?

Catherine compares the prices of candy bars in order to get the "best buy." This comparison represents using money as a

There is a movement along the demand for money curve if