Exam 11: The Monetary System

The Fed conducts an open market purchase of securities of $5,000.If the currency drain is 0 percent and the desired reserve ratio is 10 percent, then the total increase in the quantity of money is

The Fed buys $20,000 of government securities.The desired reserve ratio is 5 percent and the currency drain is zero.What will be the change in the quantity of money?

When the Fed buys a government security, what happens to the monetary base and the quantity of money? Which changes by more or do both change by the same amount?

If Federal Reserve notes and coins are $765 billion, and banks' reserves at the Fed are $8 billion, the gold stock is $11 billion, and the Fed owns $725 billion of government securities, what does the monetary base equal?

In 2008, the Fed created a new policy tool called

Which of the following is a thrift institution? i. a credit union. ii. the Fed iii. a savings bank.

What is larger: M1 or M2? Why?

When money is used to compare the relative price of a burrito and a taco, money is being used as a

If someone buries money in a tin can beneath a tree, the money is functioning as a

Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent, how much can this bank increase its loans?

Most of today's money is

When you join the local organic food market and then buy produce each month, money is used as

If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account, by how will M1 and M2 change?

The store of value function is defined as the

Which of the following is a policy tool of the Fed? i. setting the required reserve ratios ii. conducting open market operations iii. quantitative easing

"A bank can only use its excess reserves to make loans, while required reserves can only be used to buy U.S.government securities." Explain whether the previous statement is correct or incorrect.

The monetary base is equal to

Which of the following policy tools did the Fed create in 2008 to address the financial crisis? i. quantitative easing ii. credit easing iii. open market operations

Bank One has reserves of $100,000, government securities of $200,000, loans of $700,000, and checkable deposits of $800,000.If the desired reserve ratio is 10 percent, Bank One can make additional loans totaling

The Board of Governors of the Federal Reserve System has