Exam 14: The Money Supply Process

A decrease in ________ leads to an equal ________ in the monetary base in the short run.

When an individual sells a $100 bond to the Fed,she may either deposit the check she receives or cash it for currency.In both cases

In the simple deposit expansion model,if the required reserve ratio is 10 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

If reserves in the banking system increase by $100,then checkable deposits will increase by $667 in the simple model of deposit creation when the required reserve ratio is

If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of

If the required reserve ratio is 25 percent,the simple deposit multiplier is

Explain two reasons why the Fed does not have complete control over the level of bank deposits and loans.Explain how a change in either factor affects the deposit expansion process.

The Fed's holdings of securities consist primarily of ________,but also in the past have included ________.

In the simple deposit expansion model,if the required reserve ratio is 20 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

In the simple deposit expansion model,a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed

Total reserves are the sum of ________ and ________.

Decisions by depositors to increase their holdings of ________,or of banks to hold excess reserves will result in a ________ expansion of deposits than the simple model predicts.

An increase in the monetary base that goes into currency is ________,while an increase that goes into deposits is ________.

In the model of the money supply process,the bank's role in influencing the money supply process is represented by

Reserves are equal to the sum of

Everything else held constant,a decrease in holdings of excess reserves will mean

Assuming initially that r = 15%,c = 40%,and e = 5%,a decrease in e to 0% causes the M1 money multiplier to ________,everything else held constant.

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the money supply is ________ billion.

High-powered money minus currency in circulation equals

When a member of the nonbank public deposits currency into her bank account,