Exam 14: The Money Supply Process

Both ________ and ________ are monetary liabilities of the Fed.

In the model of the money supply process,the bank's role in influencing the money supply process is represented by

If reserves in the banking system increase by $100,then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is

The monetary base minus reserves equals

In the early 1930s,the currency ratio rose,as did the level of excess reserves.Money supply analysis predicts that,everything else held constant,the money supply should have

The formula that links checkable deposits to the money supply is

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

Factors causing an increase in currency holdings include

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds.If the proceeds are kept in currency,the open market purchase ________ reserves; if the proceeds are kept as deposits,the open market purchase ________ reserves.

If the Fed injects reserves into the banking system and they are held as excess reserves,then the monetary base ________ and the money supply ________.

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.

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 faces a required reserve ratio of ________ percent.

Subtracting borrowed reserves from the monetary base obtains

When the Fed supplies the banking system with an extra dollar of reserves,deposits ________ by ________ than one dollar-a process called multiple deposit creation.

When the Treasury acquires gold or SDRs,it issues certificates to the ________,which are a claim on the gold or SDRs,and in turn is credited with deposit balances at the ________.

If the required reserve ratio is 5 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

If a bank has excess reserves of $15,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has total reserves of

Everything else held constant,an increase in the required reserve ratio on checkable deposits causes the M1 money multiplier to ________ and the money supply to ________.

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,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the money supply is ________ billion.