Exam 35: Money Creation

Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent.If the bank's required and excess reserves are equal, then its actual reserves

One major component of money supply M1 is part of a bank's

During a recession, when banks tend to increase their excess reserves, the money supply M1 decreases.

If the reserve ratio is 100 percent, the value of the monetary multiplier is

When bank loans are repaid and the banks hold on to the funds as additional reserves, then the banking system's ability to "create" money decreases.

Which one of the following is presently a major deterrent to bank panics in the United States?

Requiring banks to use less leveraging is equivalent to

(Last Word) The term "leverage" refers to

If actual reserves in the banking system are $8,000, checkable deposits are $70,000, and the legal reserve ratio is 10 percent, then excess reserves are

A depositor places $10,000 in cash in a commercial bank, where the required reserve ratio is 10 percent.The bank sends the $10,000 to its Federal Reserve Bank.As a result, the actual reserves, required reserves, and excess reserves of the bank have been increased by

The last transaction in the federal funds market occurred in 2008 because Topic: Money-Creating Transactions of a Commercial Bank

The commercial banking system has excess reserves of $200,000.Then new loans of $800,000 are made, and the system ends up just meeting its reserve requirements.The required reserve ratio must be

When a bank buys government securities from the Fed, then the bank's ability to "create money" will be reduced.

Banks create money when they

Money is "created" when

The multiple by which the commercial banking system can expand the supply of money is equal to the reciprocal of

Assume that Smith deposits $600 in currency into her checking account in the XYZ Bank.Later that same day, Jones negotiates a loan for $1,200 at the same bank.In what direction and by what amounthas the supply of moneychanged?

The claims of the owners of a firm against the firm's assets are called

A bank has excess reserves of $5,000 and demand deposits of $50,000; the required reserve ratio is 20 percent.If the reserve ratio is raised to 25 percent, then this bank can lend a maximum of

When people withdraw money from their deposits in the banking system, the