Exam 8: Money, The Price Level, and Inflation

A bank has checking deposits of $400,saving deposits of $900,time deposits of $900,loans of $950,government securities of $900,outstanding credit card balances of $400,currency in its vault of $40,and deposits in its reserve account at the Fed of $40. a) What is the amount of this bank's deposits that are in M1? b) What is the amount of this bank's deposits that are in M2? c) What is the amount of this bank's reserves?

Comparing M1 and M2 we know that

The required reserve ratio is the ratio of reserves to ________ required by banking regulations.

The Board of Governors of the Federal Reserve System does NOT

The largest component of M2 is

Which of the following is true? I. Checks are considered money because they can be used as a medium of exchange. II. Checks represent a transfer of money.

Which of the following measures is NOT included in the M1 definition of money?

-In the above figure,suppose the economy is initially on the demand for money curve MD₁.What is the effect of an increase in financial innovation such as the introduction of ATMs?

A $25,000 price tag on a new car is an example of money as

"Banks hold 100 percent of their customers' deposits as reserves." Is the previous statement correct or not?

According to the quantity theory of money,in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.

Credit cards are NOT money because they

Which of the following decreases the demand for nominal money?

The monetary expansion process from an open market operation continues until

The Federal Open Market Committee (FOMC) is composed of

In response to the financial crisis of 2007 and the ensuing recession,the Fed announced three rounds of "quantitative easing," where the Fed purchased billions of dollars of securities. What impact would quantitative easing have on the monetary base?

-In the short run,which of the following actions lower the interest rate?

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

The Federal Reserve reports that it has coins valued at $10 billion,bank reserves at the Fed of $15 billion,gold valued at $10 billion,Federal Reserves notes of $400 billion,and U.S.government securities of $300 billion.What is the size of the monetary base?

The main policy designer of the Federal Reserve system is the