Exam 14: The Money Supply Process

Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply.

The amount of deposits that banks must hold in reserve is

When the Fed sells $100 worth of bonds to a primary dealer,reserves in the banking system

Which of the following are NOT assets on the Fed's balance sheet?

Which of the following are NOT liabilities on the Fed's balance sheet?

The monetary base minus reserves equals

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 40%,and the excess reserve ratio = 0,an decrease in the currency-deposit ratio to 30% causes the M1 money multiplier to ________,everything else held constant.

Everything else held constant,a decrease in holdings of excess reserves will mean

Everything else held constant,an increase in the interest rate paid on checkable deposits will cause ________ in the amount of checkable deposits held relative to currency holdings and ________ in the currency ratio.

Both ________ and ________ are Federal Reserve assets.

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,the bank can now increase its loans by

If the required reserve ratio is 20 percent,the simple deposit multiplier is

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,the simple deposit multiplier is

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

An increase in the nonborrowed monetary base,everything else held constant,will cause

In the simple deposit expansion model,a decline in checkable deposits of $500 when the required reserve ratio is equal to 20 percent implies that the Fed

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 has ________ million dollars in required reserves.

An increase in which of the following leads to a decline in the monetary base?

An increase in Treasury deposits at the Fed causes