Exam 8: Money, the Price Level, and Inflation

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

In the land of Oz the monetary unit is the emerald. Households and firms in Oz currently hold 100,000 emeralds. The price level is 100. If the price level jumps to 110 and other things remain the same, households and firms will _ .

Which of the following is NOT part of the monetary base?

The fraction of deposits that banks must keep on hand or at the Federal Reserve is called the

If you use $500 of currency to purchase a saving deposit,

How do banks create liquidity?

-Use the figure above to answer this question. Suppose the economy is operating at point a. A move to could be explained by .

Liquidity _.

A currency drain occurs because people want to hold some of their money as currency rather than as deposits.

If the Fed sells securities to commercial banks, there is no money multiplier effect.

As a "central bank," which of the following is true regarding the Fed? I. The Fed is a public authority that regulates the nation's banks. II. The Fed is not allowed to provide services to commercial banks like Citibank. III. The Fed is required to provide banking services to private citizens.

-In the figure above, if the interest rate is 6 percent,

Money market mutual funds invest in

The quantity theory of money predicts that

The Board of Governors of the Federal Reserve System consists of

What is the structure of the Federal Reserve Bank System?

The monetary base consists of

If the interest rate in the money market is above equilibrium,

-The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that

Checks money and checking deposits money.