Exam 14: The Money Supply Process

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

Assuming initially that rr = 10%,c = 40%,and e = 0,an increase in c to 50% causes the M1 money multiplier to ________,everything else held constant.

If the Fed decides to reduce bank reserves,it can

When a member of the nonbank public deposits currency into her bank account,

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 vault cash.

All else the same,when the Fed calls in a $100 discount loan previously extended to the First National Bank,reserves in the banking system

Suppose a person cashes his payroll check and holds all the funds in the form of currency. Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

If reserves in the banking system increase by $100,then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio 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

If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 15 percent,then the bank has actual reserves of

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

High-powered money minus currency in circulation equals

Explain the complete formula for the M1 money supply,and explain how changes in required reserves,excess reserves,the currency ratio,the nonborrowed base,and borrowed reserves affect the money supply.

The formula for the simple deposit multiplier can be expressed as

Everything else held constant,an increase in the required reserve ratio on checkable deposits will cause

The equation that represents M2 in the model of the money supply process 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 excess reserves-checkable deposit ratio is

When the Federal Reserve extends a discount loan to a bank,the monetary base ________ and reserves ________.

Everything else held constant,an increase in the required reserve ratio will result in ________ in M1 and ________ in M2..

The sum of the Fed's monetary liabilities and the U.S.Treasury's monetary liabilities is called