Exam 14: The Money Supply Process

The monetary base increased by 20% during the contraction of 1929-1933,but the money supply fell by 25%.Explain why this occurred.How can the money supply fall when the base increases?

If the required reserve ratio is 25 percent,the simple deposit multiplier is

During the bank panics of the Great Depression the excess reserve ratio

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?

Everything else held constant,an increase in the required reserve ratio will result in ________ in M1 and ________ in M2.

The government agency that oversees the banking system and is responsible for the conduct of monetary policy in the United States is

Excess reserves are equal to

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.

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.

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

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

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 one million dollars in required reserves.Given this information,we can say First National Bank has ________ million dollars in excess reserves.

When the Fed purchases artwork to decorate the conference room at the Federal Reserve Bank of Kansas City

A bank has excess reserves of $6,000 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 be

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the money supply is ________ billion.

The three players in the money supply process include

In the simple deposit expansion model,if the required reserve ratio is 20 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

Total reserves minus bank deposits with the Fed equals