Exam 15: The Money Supply Process

The interest rate the Bank of Canada charges banks borrowing from the Bank is the ________.

Everything else held constant, an increase in the time deposit ratio will result in ________ in the M1+ money multiplier and ________ in the M2+ money multiplier.

Of the three players in the money supply process, most observers agree that the most important player is ________.

A bank has excess reserves of $10000 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 ________.

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 ________, the open market purchase has no effect on reserves; if the proceeds are kept as ________, reserves increase by the amount of the open market purchase.

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

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $800 billion, and excess reserves total $0.8 billion, then the monetary base is ________.

In the simple deposit expansion model, an expansion in chequable deposits of $1000 when the desired reserve ratio is equal to 10 percent implies that the Bank of Canada ________.

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $800 billion, and excess reserves total $0.8 billion, then the money supply is ________.

The monetary base minus reserves equals ________.

The money supply is ________ related to the nonborrowed monetary base, and ________ related to the level of borrowed reserves.

Assume that no banks hold excess reserves, and the public holds no currency. If a bank sells a $100 security to the Bank of Canada, explain what happens to this bank and two additional steps in the deposit expansion process, assuming a 10 percent reserve requirement. How much do deposits and loans increase for the banking system when the process is completed?

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

The equation that represents M2+ in the model of the money supply process is ________.

A bank has excess reserves of $6000 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 ________.

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.

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 money supply is ________.

The government agency that oversees the banking system and is responsible for the conduct of monetary policy in Canada is ________.

During the banking crisis in the United States that ended in March 1933, ________.

The volume of loans that the Bank of Canada makes to banks is affected by the Bank's setting of the interest rate on these loans, called the ________.