Exam 13: Money and the Banking System

Which of the following lists two things that both decrease the money supply?

The discount rate is the interest rate

The primary benefit of a monetary system of exchange compared to a barter system is the increased

In the United States, the money supply (M1) consists of

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the Union Bank has no excess reserves. If a new customer deposits $50,000, the bank could extend new loans up to a maximum of

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

If the Fed injects additional reserves into the banking system, why will banks generally want to expand their loans and investments?

If a sizeable amount of U.S. currency is held outside of the United States,

Which of the following would cause the money supply in the United States to expand?

The money multiplier will be

Widespread use of credit cards

Suppose the Fed purchases $100 million of U.S. government securities from the public. How will this affect the money supply and the national debt?

The main purpose of the Fed is to

Excess reserves of banks equal

Suppose the Fed purchases $100 million of U.S. securities from the public. If the reserve requirement is 20 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a

Table 13-2 Refer to Table 13-2. If the reserve requirement is 10 percent, then this bank

Briefly explain the three functions of money.

Which of the following lists two things that both increase the money supply?

Prior to 2008, the primary tool used by the Fed to control the money supply was

Though many assets can be used as a store of value, money is a particularly attractive method to store value because