Exam 8: Money, the Price Level, and Inflation

____________real GDP increases the demand for money and ___________the nominal interest rate decreases the quantity of money demanded.

Which of the following applies to money when it serves as a store of value? I. Money is a store of value because it is an agreed measure for stating goodsʹ prices. II. The more stable moneyʹs value, the better it serves as a store of value. III. When money serves as a store of value, it requires a double coincidence of wants.

What is the equation of exchange? Suppose that real GDP and velocity are constant. In this case, what effect will an increase in the quantity of money have?

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

If nominal GDP equals $10 trillion and the velocity of circulation is 5, then

If there is an excess quantity of money, people will buy bonds.

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Excess reserves are equal to

-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?

In September 2007, Regions Bank held $3 million in reserves against M1 deposits and made $83 million in loans. Between September 2007 and September 2008, deposits decreased from $114 million to $95 million. If Regions Bank wants to maintain its desired reserve ratio in 2008, it will

During periods of inflation, which function of money is most severely affected?

The inflation rate in Venezuela has increased between 2005 and 2010, rising from 14 percent per year to 31 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to -2.6 percent per year. The quantity theory of money

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of increased use of credit cards?

The opportunity cost of holding money is

$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$ Reserves \ 30 Deposits \1 ,000 Loans \9 70 Total \ 1,000 Total \1 ,000 -The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney?s deposit, but before any other actions occur, what volume of loans will be made by MegaBank if the bank wants more profit and holds no excess reserves?

A credit union is

M1 includes

Frank spends Saturday afternoon at the Dodge dealership looking at new trucks. The model he is interested in has a sticker price of $29,000. The fact the price is quoted in dollars is an example of money as a

The rate________ is the interest rate at which the Fed lends ____________to depository institutions.

On a given day the quantity of money is ___________and the supply of money curve is______________ .