Exam 14: The Money Supply Process

The ratio that relates the change in the money supply to a given change in the monetary base is called the

The monetary base minus currency in circulation equals

The total amount of required reserves in the banking system is equal to the ________ the required reserve ratio and checkable deposits.

Of the three players in the money supply process,most observers agree that the most important player is

Assuming initially that r = 10%,c = 40%,and e = 0,an increase in c to 50% causes the M1 money multiplier to ________,everything else held constant.

If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 15 percent,then the bank has actual reserves of

When the Treasury acquires gold or SDRs,it issues certificates to the ________,which are a claim on the gold or SDRs,and in turn is credited with deposit balances at the ________.

The excess reserves ratio is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

The monetary base increased by 20% during the contraction of 1929-1933,but the money supply fell by 25%.Explain why this occurred.How can the money supply fall when the base increases?

The formula that links checkable deposits to the monetary base is

In the simple deposit expansion model,a decline in checkable deposits of $500 when the required reserve ratio is equal to 10 percent implies that the Fed

The M2 money supply is represented by

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

If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of

The interest rate the Fed charges banks borrowing from the Fed is the

An increase in the monetary base that goes into ________ is not multiplied,while an increase that goes into ________ is multiplied.

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 on deposit with the Federal Reserve.

In the simple model of multiple deposit creation in which banks do not hold excess reserves,the increase in checkable deposits equals the product of the change in excess reserves and the

An increase in ________ leads to an equal ________ in the monetary base in the short run.

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 M1 money multiplier is