Exam 14: The Money Supply Process

Total Reserves minus vault cash equals

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 faces a required reserve ratio of ________ percent.

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 10 percent,currency in circulation is $1,200 billion,checkable deposits are $1,600 billion,and excess reserves total $2,500 billion,then the M1 money multiplier is

If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 15 percent,then the bank has actual reserves of

Reserves are equal to the sum of

Since the Federal Reserve sets the required reserve ratio to less than one,one dollar of reserves can support ________ of checkable deposits.

If the required reserve ratio is 15 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the M1 money multiplier is

The sum of the Fed's monetary liabilities and the U.S.Treasury's monetary liabilities is called

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 percentage of deposits that banks must hold in reserve is the

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

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.

If the required reserve ratio is 15 percent,currency in circulation is $400 billion,checkable deposits are $1000 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 $100 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.

Which is the most important category of Fed assets?

In the simple deposit expansion model,a decline in checkable deposits of $500 when the required reserve ratio is equal to 10 percent implies that the Fed

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.

If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of