Exam 14: The Money Supply Process

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

Total reserves minus bank deposits with the Fed equals

The factor accounting for the steepest rise in the currency ratio since 1892 is

If the required reserve ratio is 10 percent,currency in circulation is $1,200 billion,checkable deposits are $1,600 billion,and excess reserves total $2,500 billion,then the excess reserves-checkable deposit ratio is

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 75%,and the excess reserve ratio = 156%,an increase in the currency-deposit ratio to 150% causes the M1 money multiplier to ________,everything else held constant.

Purchases and sales of government securities by the Federal Reserve are called

Assume that no banks hold excess reserves,and the public holds no currency. If a bank sells a $100 security to the Fed,explain what happens to this bank and two additional steps in the deposit expansion process,assuming a 10% reserve requirement. How much do deposits and loans increase for the banking system when the process is completed?

In the model of the money supply process for M2,the relationship between checkable deposits and the M2 money supply is represented by

The excess reserves ratio is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

When the Treasury acquires gold or SDRs,it issues certificates to the ________,which are a claim on the gold or SDRs,and in turn is credited with deposit balances at the ________.

Both ________ and ________ are Federal Reserve assets.

The two most important categories of assets on the Fed's balance sheet are ________ and ________ because they earn interest.

From the start of the global financial crisis in 2007 to date,the currency ratio

Both ________ and ________ are monetary liabilities of the Fed.

The Fed can exert more precise control over ________ than it can over ________.

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 75%,and the excess reserve ratio = 156%,an increase in the required reserve ratio to 15% causes the M1 money multiplier to ________,everything else held constant.

Suppose the Bank of China permanently decreases its purchases of U.S. government bonds and,instead,holds more dollars on deposit at the Federal Reserve. Everything else held constant,a open market ________ would be the appropriate monetary policy action for the Fed to take to offset the expected ________ in the monetary base in the United States.

An assumption in the model of the money supply process is that the desired levels of currency and excess reserves