Exam 14: The Money Supply Process

Reserves are equal to the sum of

Individuals that lend funds to a bank by opening a checking account are called

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.

When the Fed buys $100 worth of bonds from First National Bank,reserves in the banking system

When the Fed extends a $100 discount loan to the First National Bank,reserves in the banking system

Both ________ and ________ are Federal Reserve assets.

If a member of the nonbank public sells a government bond to the Federal Reserve in exchange for currency,the monetary base will ________,but ________.

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 excess reserves-checkable deposit ratio is

If the required reserve ratio is 25 percent,the simple deposit multiplier is

Total Reserves minus vault cash equals

If a member of the nonbank public purchases a government bond from the Federal Reserve in exchange for currency,the monetary base will ________,but reserves will ________.

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

The monetary base consists of

A bank has excess reserves of $10,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent.If the reserve ratio is raised to 25 percent,the bank's excess reserves will be

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

Assume that no banks hold excess reserves,and the public holds no currency.If a bank sells a $100 security to the Fed,explain what happens to this bank and two additional steps in the deposit expansion process,assuming a 10% reserve requirement.How much do deposits and loans increase for the banking system when the process is completed?

A ________ in market interest rates relative to the discount rate will cause discount borrowing to ________.

The amount of deposits that banks must hold in reserve is

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 has ________ million dollars in excess reserves.

When a member of the nonbank public withdraws currency from her bank account,