Exam 8: Money, the Price Level, and Inflation

$\text { University National Bank Balance Sheet Assets}\quad \text { Liabilities }$ Reserves \ 320 Deposits \4 40 Loans \1 20 Total assets \ 440 Total liabilities \4 40 -The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all excess reserves were loaned out?

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

What effect does an increase in the interest rate have on the opportunity cost of holding money and on the demand for money curve?

The Bank of Japan is Japanʹs central bank. As part of its duties, the Bank of Japan would

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of a fall in the nominal interest rate?

Which of the following is a tool that is used by the Fed to control the quantity of money?

A bank has checking deposits of $400, saving deposits of $900, time deposits of $900, loans of $950, government securities of $900, outstanding credit card balances of $400, currency in its vault of $40, and deposits in its reserve account at the Fed of $40. a) What is the amount of this bankʹs deposits that are in M1? b) What is the amount of this bankʹs deposits that are in M2? c) What is the amount of this bankʹs reserves?

The money multiplier is

The Fed buys $100 million of government securities from Bank A. What is the effect on the Federal Reserveʹs balance sheet?

Which of the following is an example of money functioning as a medium of exchange?

The Board of Governors of the Federal Reserve System consists of

Which of the following is true regarding the quantity theory of money? I. The theory predicts that in the long run the inflation rate equals the money growth rate minus the growth rate of real GDP. II. The theory predicts that countries with high growth rates of money will have high inflation rates. III. The theory predicts that increases in the growth rate of velocity lowers the inflation rate.

An open market operation involves

The main policy-making organ of the Federal Reserve System is the

The direct exchange of goods and services for other goods and services is known as

Pooling of risk occurs when depository institutions

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bankʹs reserve ratio is

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

According to the quantity theory of money, changes in the price level are the result of changes in the

Depository institutions undertake all the following activities except they do not .