Exam 14: The Money Supply Process

The excess reserves ratio is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

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 excess reserves-checkable deposit ratio is

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 vault cash.

The monetary base consists of

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

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.

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-deposit ratio causes the M1 money multiplier to ________ and the money supply to ________.

During the bank panics of the Great Depression the currency ratio

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

The money supply is ________ related to the nonborrowed monetary base,and ________ related to the level of borrowed reserves.

Assuming initially that the required reserve ratio = 15%,the currency-deposit ratio = 40%,and the excess reserve ratio = 5%,a decrease in the excess reserve ratio to 0% causes the M1 money multiplier to ________,everything else held constant.

A Fed purchase of gold,SDRs,a deposit denominated in a foreign currency or any other asset is just an open market ________ of these assets,________ the monetary base.

High-powered money minus reserves equals

The relationship between borrowed reserves (BR),the nonborrowed monetary base (MBn),and the monetary base (MB)is

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 M1 money multiplier is

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

Models describing the determination of the money supply and the Fed's role in this process normally focus on ________ rather than ________,since Fed actions have a more predictable effect on the former.

A decrease in ________ leads to an equal ________ in the monetary base in the short run.

Suppose the Bank of China permanently decreases its purchases of U.S.government bonds and,instead,holds more dollars on deposit at the Federal Reserve.Everything else held constant,a open market ________ would be the appropriate monetary policy action for the Fed to take to offset the expected ________ in the monetary base in the United States.

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