Exam 14: The Money Supply Process

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,eight million dollars on deposit with the Federal Reserve,and nine million dollars in excess reserves.Given this information,we can say First National Bank has ________ million dollars in required reserves.

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds.If the proceeds are kept in currency,the open market purchase ________ reserves; if the proceeds are kept as deposits,the open market purchase ________ reserves.

Everything else held constant,an increase in the time deposit ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply.

The sum of the Fed's monetary liabilities and the U.S.Treasury's monetary liabilities is called

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,one million dollars in required reserves,and faces a required reserve ratio of ten percent.Given this information,we can say First National Bank has ________ million dollars in excess reserves.

Everything else held constant,an increase in the required reserve ratio will result in ________ in M1 and ________ in M2..

Both ________ and ________ are Federal Reserve assets.

The money supply is ________ related to the nonborrowed monetary base,and ________ related to the level of borrowed reserves.