Exam 8: Money, the Price Level, and Inflation

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank has desired reserves of

As a unit of account, money is used to

Which of the following is NOT an economic benefit of depository institutions?

Explain how the money market determines the equilibrium interest rate.

According to the quantity theory of money, inflation causes an increase in the money supply.

Which of the following tools is NOT a policy tool of the Fed?

The quantity theory of money predicts how changes in

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

According to the quantity theory of money, in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

Aside from being a means of payment, the other functions of money are

-In the figure above, a decrease in the monetary base would create a change such as a

Which of the following is TRUE? I.Checks are considered money because they can be used as a medium of exchange. II.Checks represent a transfer of money.

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

If an economy has no money, then all transactions must be conducted through the use of ________.

An increase in ________ decreases the quantity of money people want to hold.

Money market mutual funds invest in

If nominal GDP = $15 trillion and the quantity of money is $3 trillion, what is the velocity of circulation?

If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?

The ________ rate is the interest rate at which the Fed lends ________ to depository institutions.