Exam 15: The Money Supply Process

Both ________ and ________ are Bank of Canada assets.

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

Which is the largest category of Bank of Canada assets?

If the money supply is equal to $400 billion and the monetary base is equal to $100 billion, the money multiplier is equal to ________.

The monetary base consists of ________.

An increase in the monetary base that goes into ________ is not multiplied, while an increase that goes into ________ is multiplied.

The monetary base increased by 20 percent during the contraction of 1929-1933, but the money supply fell by 25 percent. Explain why this occurred. How can the money supply fall when the base increases?

If the desired reserve ratio is 10 percent, the simple deposit multiplier is ________.

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds. If the proceeds are kept in currency, the open market purchase ________ reserves; if the proceeds are kept as deposits, the open market purchase ________ reserves.

The formula linking the money supply to the monetary base is ________.

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 ________.

If a member of the nonbank public purchases a government bond from the Bank of Canada in exchange for currency, the monetary base will ________, but reserves will ________.

The monetary liabilities of the Bank of Canada include ________.

If a bank has excess reserves of $4000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of ________.

Individuals that lend funds to a bank by opening a chequing account are called ________.

If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable deposits are $900 billion, then the monetary base is ________.

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

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.

When the Bank of Canada sells $100 worth of bonds to First National Bank, reserves in the banking system ________.

If the desired reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to ________.