Exam 29: The Monetary System

Table 29-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below. -Refer to Table 29-2.If all banks in the economy have the same reserve ratio as this bank,then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by

Which of the following lists two things that both increase the money supply?

Suppose a bank's reserve ratio is 10 percent and the bank has $2,000 in deposits.Its reserves amount to

Which of the following is included in M2 but not in M1?

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

Which tool of monetary policy does the Federal Reserve use most often?

Today,bank runs are

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 entities actually executes open-market operations?

Table 29-5. Bank of Kopeka -Refer to Table 29-5.Assume there is a reserve requirement and the Bank of Kopeka is exactly in compliance with that requirement.Assume the same is true for all other banks.Lastly,assume people hold only deposits and no currency.What is the money multiplier?

Federal Reserve governors are given long terms to insulate them from politics.

Monetary policy affects employment

An increase in the money supply might indicate that the Fed had

In early 2008,the Federal Reserve

If the central bank in some country lowered the reserve requirement,then the money multiplier for that country

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.

To increase the money supply,the Fed could

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 20 percent,this action by itself initially makes the money supply

Table 29-4. The First Bank of Wahooton -Refer to Table 29-4.If the bank faces a reserve requirement of 20 percent,then it

Which of the following is not included in M1?