Exam 14: The Money Supply Process

The declining trend in the currency-deposit ratio during 2007-2014 can be explained by

A bank has no excess reserves and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent,the bank's excess reserves will now be

If reserves in the banking system increase by $200,then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is

The simple deposit multiplier can be expressed as the ratio of the

An increase in Treasury deposits at the Fed causes

There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.

Everything else held constant,an increase in the time deposit ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply.

If reserves in the banking system increase by $100,then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 40%,and the excess reserve ratio = 0,an increase in the currency-deposit ratio to 50% causes the M1 money multiplier to ________,everything else held constant.

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,eight million dollars on deposit with the Federal Reserve,and nine million dollars in excess reserves. Given this information,we can say First National Bank has ________ million dollars in required reserves.

When the Federal Reserve sells a government bond to a primary dealer,reserves in the banking system ________ and the monetary base ________,everything else held constant.

A Fed purchase of gold,SDRs,a deposit denominated in a foreign currency or any other asset is just an open market ________ of these assets,________ the monetary base.

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1,000 billion,and excess reserves total $1 billion,then the money supply is ________ billion.

Decisions by depositors to increase their holdings of ________,or of banks to hold ________ will result in a smaller expansion of deposits than the simple model predicts.

When the Federal Reserve purchases a government bond from a primary dealer,reserves in the banking system ________ and the monetary base ________,everything else held constant.

Factors causing an increase in currency holdings include

An increase in the monetary base that goes into currency is ________,while an increase that goes into deposits is ________.

Total reserves are the sum of ________ and ________.

When the Federal Reserve calls in a discount loan from a bank,the monetary base ________ and reserves ________.

The money multiplier is