Exam 14: The Money Supply Process

The increase in the availability of ATMs has caused the cost of acquiring currency to ________ which will cause the currency ratio to ________,everything else held constant.

The monetary base minus currency in circulation equals

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 75%,and the excess reserve ratio = 156%,an increase in the excess reserve ratio to 200% causes the M1 money multiplier to ________,everything else held constant.

Which is the most important category of Fed assets?

Individuals that lend funds to a bank by opening a checking account are called

Explain two reasons why the Fed does not have complete control over the level of bank deposits and loans. Explain how a change in either factor affects the deposit expansion process.

Suppose that from a new checkable deposit,First National Bank holds eight million dollars on deposit with the Federal Reserve,one million dollars in required reserves,and faces a required reserve ratio of ten percent. Given this information,we can say First National Bank has ________ million dollars in excess reserves.

When the Fed sells $100 worth of bonds to a primary dealer,reserves in the banking system

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

Everything else held constant,a decrease in the required reserve ratio on checkable deposits causes the M1 money multiplier to ________ and the money supply to ________.

The total amount of required reserves in the banking system is equal to the ________ the required reserve ratio and checkable deposits.

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,one million dollars in required reserves,and faces a required reserve ratio of ten percent. Given this information,we can say First National Bank has ________ million dollars on deposit with the Federal Reserve.

If a bank has excess reserves of $10,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has actual reserves of

Suppose,while cleaning out its closets,a worker at the Federal Reserve bank branch in Memphis discovers a painting of Elvis (medium: acrylic on velvet)that used to grace the walls of the conference room. Suppose further that,at a public auction,the bank sells the painting for $19.95. This sale will cause ________ in the monetary base,everything else held constant.

An increase in ________ leads to an equal ________ in the monetary base in the short run.

A simple deposit multiplier equal to one implies a required reserve ratio equal to

In the simple model of multiple deposit creation in which banks do not hold excess reserves,the increase in checkable deposits equals the product of the change in reserves and the

The monetary base consists of

The amount of borrowed reserves is ________ related to the discount rate,and is ________ related to the market interest rate.

The volume of loans that the Fed makes to banks is affected by the Fed's setting of the interest rate on these loans,called the