Exam 18: Money and the Monetary System

The monetary base does NOT include which of the following items? I. Federal Reserve notes Ii. banks' reserves at the Federal Reserve Iii. U.S. government securities owned by the Federal Reserve

The function of money that helps assess the opportunity cost of an activity is money's use as a

Which of the following is NOT a component of M1?

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank. Bank One's reserves ________ and its deposits ________.

A credit card is

Which of the following accept deposits from or sell shares to the general public? I. money market funds Ii. thrift institutions Iii. commercial banks

Actual reserves are equal to

The Fed buys $50,000 of government securities. The desired reserve ratio is 10 percent and the currency drain ratio is zero. What will be the change in the quantity of money?

The Federal Reserve System is organized into ________ Federal Reserve districts.

A commercial bank's main goal is to

The desired reserve ratio is 10 percent. Fly By Night Bank has deposits of $250,000 and reserves of $25,000. What is the amount of its excess reserves?

The main policy making body of the Federal Reserve System is the

The Second National Bank of Townville has $400,000 in checking deposits, $125,000 in savings deposits, $500,000 in loans, $20,000 in its reserve account at the Fed, and $5,000 of currency in its vault. What is the amount of its reserves?

Which statement about money is most correct?

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Which of the following are policy tools used by the Federal Reserve? I. the federal personal income tax Ii. open market operations Iii. changing the required reserve ratio

Explain what is included in M1 and M2. Is all of M1 money? Is all of M2 money?

The Fed purchases $1 million of U.S. government securities from First Bank. The desired reserve ratio is 10 percent, the currency drain ratio is zero, and banks loan all excess reserves. The money multiplier is equal to

A bank has reserves of $50, deposits of $100, loans of $20, and government securities of $30. Assume the desired reserve ratio is 20 percent. a. What are the bank's assets and what are its liabilities? b. How much does the bank have in excess reserves? c. What can the bank do with its excess reserves that will affect the quantity of money?

A public authority that provides banking services to commercial banks and regulates financial institutions and markets is called a