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 one million dollars in required reserves.Given this information,we can say First National Bank has ________ million dollars in excess reserves.

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 M1 money multiplier is

The monetary base consists of

In the simple deposit expansion model,a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed

If the required reserve ratio is 15 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

Suppose a person cashes his payroll check and holds all the funds in the form of currency.Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

The amount of deposits that banks must hold in reserve is

If the Fed injects reserves into the banking system and they are held as excess reserves,then the monetary base ________ and the money supply ________.

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 faces a required reserve ratio of ________ percent.

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

During the bank panics of the Great Depression the excess reserve ratio

If the required reserve ratio is one-third,currency in circulation is $300 billion,and checkable deposits are $900 billion,then the money supply is ________ billion.

The Fed does not tightly control the monetary base because it does not completely control

If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has total reserves of

Total Reserves minus vault cash equals

Everything else held constant,an increase in wealth will cause the holdings of checkable deposits to the holdings of currency to ________ and the currency ratio will ________.

When the Federal Reserve extends a discount loan to a bank,the monetary base ________ and reserves ________.

Everything else held constant,an increase in currency holdings will cause

Everything else held constant,an increase in the currency-checkable deposit ratio will mean

When the Fed supplies the banking system with an extra dollar of reserves,deposits ________ by ________ than one dollar-a process called multiple deposit creation.