Exam 8: Money, the Price Level, and Inflation

In February, 2010 the U.S. M1 money multiplier crashed to 0.786. Each $1 increase in the monetary base resulted in the quantity of money increasing by only $0.79. Where did the remaining $0.21 disappear?

What are the economic functions of depository institutions?

Which of the following decreases the demand for nominal money?

The demand for money is ________ related to the nominal interest rate.

In Zealand, banks' desired reserve ratio is 20 percent and there is no currency drain. The money multiplier equals ________.

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

U.S. currency ________.

The Fed buys $50,000 of government securities from Commerce Bank. The desired reserve ratio is 25 percent. What is the change in Commerce Bank's total reserves and its excess reserves?

The monetary base does NOT include

The risk of making a loan is

The sum of currency and reserves of depository institutions is the ________.

What is the discount rate?

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to ________.

-In the above figure, suppose the economy is initially on the demand for money curve MD?. What is the effect of a rise in the nominal interest rate?

An increase in real GDP

Which of the following is an example of money functioning as a unit of account?

Depository institutions are good at minimizing

Money is created by

The table below shows the data (in millions)for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent. The data show that

-In the above figure, suppose the economy is initially on the demand for money curve MD?. What is the effect of an increase in the use of credit cards?