Exam 16: The Money Supply Process

In the simple model of multiple deposit creation in which banks do not hold excess reserves,the increase in chequable deposits equals the product of the change in excess reserves and the ________.

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

When the Bank of Canada calls in a loan from a bank,the monetary base ________ and reserves ________.

Which of the following are not assets on the Bank of Canada's balance sheet?

Everything else held constant,an increase in currency holdings will cause ________.

The Bank does not tightly control the monetary base because it does not completely control ________.

Explain the complete formula for the money supply,and explain how changes in desired reserves,excess reserves,the currency ratio,the nonborrowed base,and Bank of Canada lending affect the money supply.

If a bank has excess reserves of $5,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has actual reserves of ________.

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

The monetary base declines when ________.

Purchases and sales of government securities by the Bank of Canada are called ________.

If the desired reserve ratio is 25 percent,the simple deposit multiplier is ________.

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

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

Decisions by depositors to increase their holdings of ________,or of banks to hold ________ will result in a smaller expansion of deposits than the simple model predicts.

A bank has excess reserves of $4,000 and demand deposit liabilities of $100,000 when the desired reserve ratio is 20 percent.If the reserve ratio is raised to 25 percent,the bank's excess reserves will be ________.

In the simple deposit expansion model,a decline in chequable deposits of $500 when the desired reserve ratio is equal to 10 percent implies that the Bank of Canada ________.

If the money multiplier is equal to 2 and the money supply is equal to $100 billion,the monetary base is equal to ________.

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

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