Exam 16: The Monetary System

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Sam wants to trade eggs for sausage. Sally wants to trade sausage for eggs. Sam and Sally have a double-coincidence of wants.

When the Fed purchases $200 worth of government bonds from the public, the U.S. money supply eventually increases by

If the reserve ratio is 20 percent, how much money can be created from $100 of reserves? Show your work.

Table 16-3. -Refer to Table 16-3. The reserve ratio for this bank is

The president of each regional Federal Reserve Bank is appointed by

When the Federal Reserve conducts open-market operations to increase the money supply, it

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account. As a result of this transfer by itself

The money supply of Granov is $10,000 in a 100-percent-reserve banking system. If the Central Bank of Granov decreases the reserve requirement ratio to 10 percent, the money supply could increase by no more than $9,000.

The interest rate the Fed charges on loans it makes to banks is called

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to

Which of the following is a liability of a bank and an asset of its customers?

At one time, people in a certain country had no access to banks; they relied exclusively on currency. Then, a fractional-reserve banking system was created. As a result, the money supply

M2 is both larger and less liquid than M1.

You use U.S. currency to pay the owner of a restaurant for a delicious meal. The currency

Dollar bills, rare paintings, and emerald necklaces are all

To increase the money supply, the Fed could

Bottles of very fine wine are less liquid than demand deposits.