Exam 29: The Monetary System

Table 29-3. The First Bank of Johnson City -Refer to Table 29-3.Starting from the situation as depicted by the T-account,if someone deposits $500 into the First Bank of Johnson City,and if the bank makes new loans so as to keep its reserve ratio unchanged,then the amount of new loans that it makes will be

Table 29-4. The First Bank of Wahooton -Refer to Table 29-4.If the bank faces a reserve requirement of 10 percent,then the bank

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

If the Fed makes open market purchases of bonds,

The Fed can increase the money supply by conducting open-market

The Fed can influence unemployment in

Imagine that the federal funds rate was above the level the Federal Reserve had targeted.To move the rate back towards it's target the Federal Reserve could

Which of the following is correct?

Which of the following might explain why the United States has so much currency per person?

If the discount rate is lowered,banks choose to borrow

What is the difference between money and wealth?

One surprising thing about the U.S.money stock is that

Suppose that in a country the total holdings of banks were as follows: required reserves = $45 million excess reserves = $15 million deposits = $750 million loans = $600 million Treasury bonds = $90 million Show that the balance sheet balances if these are the only assets and liabilities. Assuming that people hold no currency,what happens to each of these values if the central bank changes the reserve requirement ratio to 3%,banks still want to hold the same percentage of excess reserves,and banks don't change their holdings of Treasury bonds? How much does the money supply change by?

During wars the public tends to hold relatively more currency and relatively fewer deposits.This decision makes reserves

In a fractional-reserve banking system,an increase in reserve requirements

Gary's wealth is $1 million.Economists would say that Gary has $1 million worth of money.

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Roundabout trade is beneficial for an economy.

M1 includes savings deposits.

A decrease in the money supply might indicate that the Fed had