Exam 13: Money and the Banking System

Discuss the changes that have and will in the future affect the usefulness of the M1 and M2 money supply figures as indicators of monetary policy.

Which one of the following is the largest component of the money supply (M1) in the United States?

Suppose Laqueta deposits $10,000 of cash into a checking account at a commercial bank. The immediate effect is

The primary source of revenue for the Federal Reserve is

Which of the following compose the M2 money supply?

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Which of the following will increase the excess reserves of commercial banks?

Under the Term Auction Facility (TAF), the rate that a depository institution pays on a loan from the Fed is determined by

Money is

Explain how the Fed would use its four tools to decrease and to increase the money supply.

Which of the following is the primary tool the Fed uses to control the supply of money?

The main purpose of the Fed is to

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits, then bank reserves will

When the Fed sells Treasury Bonds on the open market, it will tend to

When the actual reserves held by a bank exceed the legal requirement, the bank

Money is used as a unit of account. This means

If debit cards become more widely used by consumers and businesses, which of the following is most likely to happen?

The discount rate is the interest rate

When a customer deposits $100 into a checking account, the effect is to

If the Fed wanted to shift to a restrictive monetary policy and reduce the money supply, it could