Exam 14: The Money Supply Process

Everything else held constant,a decrease in the currency ratio will mean ________ in the M1 money multiplier and ________ in the M2 money multiplier.

If the required reserve ratio is one-third,currency in circulation is $300 billion,and checkable deposits are $900 billion,then the money supply is ________ billion.

Factors causing an increase in currency holdings include

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

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

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

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

Both ________ and ________ are monetary liabilities of the Fed.

In the simple deposit expansion model,if the required reserve ratio is 10 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

The declining trend in the currency-deposit ratio during 2007-2014 can be explained by

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

If the required reserve ratio is 15 percent,the simple deposit multiplier is

Everything else held constant,if the sum of the required reserve ratio and the excess reserve ratio is greater than one,an increase in the currency-deposit ratio causes the M1 money multiplier to ________ and the money supply to ________.

In the simple deposit expansion model,an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed

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

Everything else held constant,a decrease in the excess reserves ratio causes the M1 money multiplier to ________ and the money supply to ________.

Total reserves are the sum of ________ and ________.

There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.

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 money supply is ________ billion.

When the Fed supplies the banking system with an extra dollar of reserves,deposits increase by more than one dollar-a process called