Exam 14: The Money Supply Process

If the required reserve ratio is 5 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the M1 money multiplier is

Everything else held constant,an increase in the excess reserve ratio will mean ________ in the M1 money multiplier and ________ in the M2 money multiplier.

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

If reserves in the banking system increase by $100,then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the currency ratio is

High-powered money minus reserves equals

In the simple deposit expansion model,if the Fed extends a $100 discount loan to a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

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

Individuals that lend funds to a bank by opening a checking account are called

Which is the most important category of Fed assets?

Everything else held constant,a decrease in the currency ratio causes the M1 money multiplier to ________ and the money supply to ________.

If a member of the nonbank public purchases a government bond from the Federal Reserve in exchange for currency,the monetary base will ________,but reserves will ________.

If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 15 percent,then the bank has actual reserves of

The monetary base declines when

Everything else held constant,a decrease in the currency ratio will mean ________ in the M1 money multiplier and ________ in the M2 money multiplier.

If the required reserve ratio is 10 percent,the simple deposit multiplier is

A simple deposit multiplier equal to one implies a required reserve ratio equal to

When banks borrow money from the Federal Reserve,these funds are called

If the required reserve ratio is 15 percent,the simple deposit multiplier is

Suppose,while cleaning out its closets,a worker at the Federal Reserve bank branch in Memphis discovers a painting of Elvis (medium: acrylic on velvet)that used to grace the walls of the conference room.Suppose further that,at a public auction,the bank sells the painting for $19.95.This sale will cause ________ in the monetary base,everything else held constant.