Exam 29: The Monetary System

Scenario 29-1. The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits. -Refer to Scenario 29-1. Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply of Namdia change?

The agency responsible for regulating the money supply in the United States is

In a fractional-reserve banking system, a bank

Prisoners sometimes determine a single good to be used as money. This good becomes

Reserves increase if the Federal Reserve

How does the Fed Open Market Committee increase the money supply?

Which of the following is not a central bank?

​Under a fractional-reserve banking system, the money supply cannot change without any action from the Federal Reserve.

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Table 29-6. -Refer to Table 29-6. From the table it follows that the Bank of Pleasantville operates in a

Describe the role of the Federal Deposit Insurance Corporation (FDIC).

Lisa deposits $750 with her bank. The T-account for her bank account is now: ​ ​ What is the change in the money supply?

In the special case of the 100 percent-reserve banking, the money multiplier is

A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is

If the reserve ratio is 6 percent, then $9,000 of additional reserves can create up to

When conducting an open-market purchase, the Fed

Reserves decrease if the Federal Reserve

The Federal Deposit Insurance Corporation

Banks can hold deposits at the Federal Reserve. Balances in these accounts can be used by banks to meet their reserve requirements, but the Fed pays no interest on these deposits.

Which of the following statements is correct? In the special case of the 100-percent reserve banking the money multiplier is