Exam 15: The Money Supply Process

If a bank has excess reserves of $20000 and demand deposit liabilities of $80000, and if the reserve requirement is 20 percent, then the bank has total reserves of ________.

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

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the currency ratio is ________.

An increase in ________ leads to an equal ________ in the monetary base in the long run.

If reserves in the banking system increase by $100, then chequable deposits will increase by $667 in the simple model of deposit creation when the desired reserve ratio is ________.

In the simple deposit expansion model, a decline in chequable deposits of $1000 when the desired reserve ratio is equal to 20 percent implies that the Bank of Canada ________.

A decrease in ________ leads to an equal ________ in the monetary base in the long run.

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

The monetary base declines when ________.

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the monetary base is ________.

How changes in the nonborrowed monetary base affect the money supply?

Who are the three players in the money supply process? Describe their roles.

If the desired reserve ratio is 20 percent, the simple deposit multiplier is ________.

When banks borrow money from the Bank of Canada, these funds are called ________.

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 desired reserve ratio is 15 percent, the simple deposit multiplier is ________.

High-powered money minus currency in circulation equals ________.

Explain two ways by which the Bank of Canada can increase the monetary base. Why is the effect of Bank of Canada actions on bank reserves less exact than the effect on the monetary base?

A bank has excess reserves of $4000 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 ________.

A decrease in ________ leads to an equal ________ in the monetary base in the short run.