Exam 14: Banking and the Money Supply.

When the Fed buys U.S. government securities from a bank, that bank's excess reserves and required reserves increase, but total reserves decrease.

Which of the following is not an activity of the Fed?

One of the main functions of the Fed is minting U.S. coins.

Suppose the required reserve ratio is 0.2 and the Fed buys $5,000 of U.S. government securities from Bank A, which lends $4,000 and keeps $1,000 in its vault as cash. In this round of the money-creation process, the M1 money supply has increased by _____

The primary tool the Fed uses to control the money supply today is _____

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000, then the _____

Which of the following is correct?

When the Fed buys U.S. government securities from a bank, that bank's excess reserves and total reserves increase, but there is no change in required reserves.

Which of the following is correct about banks?

If the required reserve ratio is 20 percent, the simple money multiplier must be equal to _____

The least liquid of the assets listed below is _____

The economy is more efficient because _____

Which of the following is an asset to a bank?

Stores need not accept your check but must accept currency because _____

Banks are permitted to lend all of their reserves.

What undermines bitcoin's functions as a unit of account and as a store of value?

By reducing the required reserve ratio, the Fed can not only create excess reserves but also increase the money multiplier.

The Fed tries to prevent major financial crises through its control of financial markets.

On a bank's balance sheet, the value of its assets must equal the value of its _____

If the Fed purchases government securities in the open market, _____