Exam 8: Money, the Price Level, and Inflation

Read the following statements and determine if they are true or false. I.According to the quantity theory of money, an increase in the growth rate of the quantity of money increases inflation in the long run. II.Historical and international data show that there is no correlation between inflation and money growth.

The velocity of circulation is

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its excess reserves are

The definition of M2 includes I.M1. II.money market mutual funds. III.currency held outside of banks.

The larger the public's currency drain from the banking system, the

Control of the nation's quantity of money is handled by

In a barter system, we would see

Briefly describe the Federal Reserve System, how it is governed, and its roles in the economy.

Explain which of the following count as money. a)a check in Ann's checkbook b)currency in Ann's bank c)currency in Ann's purse d)Ann's checking deposit

The money multiplier is

Examples of thrift institutions include

The table below shows data (in millions)for Sun Trust Banks in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent. The data show that Sun Trust ________ make more loans in 2007 and ________ make more loans in 2008.

The velocity of circulation is

Credit cards are

Which of the following is NOT a monetary policy tool of the Federal Reserve?

A bank reports reserves of $100,000, government securities of $50,000, loans of $750,000, and checkable deposits of $900,000. The desired reserve ratio is 10 percent. What is the amount of excess reserves for this bank? Show your work.

Suppose that M = 300, P = 150, and Y = 6. Then the velocity of circulation equals

The practice of borrowing short and lending long

Depository institutions

The opportunity cost of holding money balances rather than holding other assets is