Exam 8: Money, the Price Level, and Inflation

Suppose prices are quoted in dollars and transactions are conducted in pesos. The dollar serves as a

The opportunity cost of holding money refers to

The demand for money curve shifts rightward if

"A bank can only use its excess reserves to make loans, while required reserves can only be used to buy U.S. government securities." Explain whether the previous statement is correct or incorrect.

-According to the table above, the value of M1 is and the value of M2 is .

Depository institutions do all of the following EXCEPT

When bank deposits increase from $1 million to $2 million, banks' required reserves increase from $100,000 to $200,000. The required reserve ratio is .

-In the balance sheet above, the entries are in millions of dollars for the FBN Bank. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has excess reserves of

Money's function as a medium of exchange means that

The U.S. central bank is formally called the

The commercial banks on Sunny Island have checking deposits of $4 million, reserves of $600,000, and loans of $2.4 million. The desired reserve ratio is 10 percent. The banks have of desired reserves and of excess reserves.

The term "currency drain" refers to an increase in currency held outside banks.

This group consists of seven members appointed by the President of the United States for 14- year terms:

The demand for money is

The higher the interest rate, the

Which of the following is NOT true of the equation of exchange?