Exam 14: The Money Supply Process

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

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 M1 money multiplier is

If reserves in the banking system increase by $100,then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is

A ________ in market interest rates relative to the discount rate will cause discount borrowing to ________.

When the Fed extends a $100 discount loan to the First National Bank,reserves in the banking system

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the excess reserves-checkable deposit ratio is

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

High-powered money minus currency in circulation equals

If the required reserve ratio is 15 percent,currency in circulation is $400 billion,checkable deposits are $1,000 billion,and excess reserves total $1 billion,then the M1 money multiplier is

If the required reserve ratio is 10 percent,the simple deposit multiplier is

A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve requirement is 25 percent. If the reserve requirement is lowered to 20 percent,the bank's excess reserves will be

Part of the increase in currency holdings in the 1960s and 1970s can be attributed to

Everything else held constant,if the sum of the required reserve ratio and the excess reserve ratio is less than one,a decrease in the currency-checkable deposit ratio will mean

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

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

If the required reserve ratio is equal to 10 percent,a single bank can increase its loans up to a maximum amount equal to

If the required reserve ratio is one-third,currency in circulation is $300 billion,checkable deposits are $900 billion,and there is no excess reserve,then the M1 money multiplier is

If the Fed injects reserves into the banking system and they are held as excess reserves,then the monetary base ________ and the money supply ________.

In the simple deposit expansion model,a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed

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