Exam 8: Money, the Price Level, and Inflation

In the economy of Brightland, the commercial banks have deposits of $600 billion. Their reserves are $60 billion. reserves are in deposits with the Central Bank and the commercial banks hold no excess reserves. There is $120 b Central Bank notes outside the banks, and there are no coins. a) What is the economy's monetary base? b) What is the quantity of money in the economy? c) Calculate the money multiplier. d) Suppose the Central Bank of Brightland undertakes an open market purchase of securities of so that the mon base increases by $5 billion. By how much will the quantity of money change?

Which of the following is NOT one of the Fed's monetary policy tools?

Money market mutual funds

A bank creates money by

Money .

The commercial banks in Fundland have Reserves $500 million Loans $3,500 million Deposits $4,000 million Total assets $5,000 million The banks hold no excess reserves. a) Calculate the banks' desired reserve ratio. b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the imm bank lend initially?

An asset category that caries the highest interest rate is

The main policy- making body of the Federal Reserve System is the Federal Open Market committee.

The tools at the disposal of the Fed for changing the quantity of money do NOT include

As a unit of account, money is used to

The table below shows data for Brazil. Assuming the rate of velocity change is constant,

Which of the following allow banks to minimize the cost to a business of borrowing? I. Borrowing long and lending short. II. Raising funds from a large number of depositors. III. Creating money by lending all their reserves.

Which of the following is NOT included in the M1 measure of money?

The most direct way in which money replaces barter is through its use as a

If the interest rate is above the equilibrium interest rate, then

All of the following are examples of financial innovations that have decreased the demand for money EXCEPT

All the following statements about a central bank are true EXCEPT it .

Are checks and credit cards money? Explain why or why not.

A credit union is

The demand for money is