Exam 14: The Money Supply Process

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

If a person selling bonds to the Fed cashes the Fed's check,then reserves ________ and currency in circulation ________,everything else held constant.

Assume that no banks hold excess reserves,and the public holds no currency.If a bank sells a $100 security to the Fed,explain what happens to this bank and two additional steps in the deposit expansion process,assuming a 10% reserve requirement.How much do deposits and loans increase for the banking system when the process is completed?

The formula linking the money supply to the monetary base is

When the Fed supplies the banking system with an extra dollar of reserves,deposits increase by more than one dollar-a process called

The money supply is ________ related to expected deposit outflows,and is ________ related to the market interest rate.

A bank has excess reserves of $4,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent.If the reserve ratio is raised to 25 percent,the bank's excess reserves will be

If reserves in the banking system increase by $200,then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is

When the Federal Reserve sells a government bond to a bank,reserves in the banking system ________ and the monetary base ________,everything else held constant.

Suppose that from a new checkable deposit,First National Bank holds two million dollars in vault cash,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 on deposit with the Federal Reserve.

The volume of loans that the Fed makes to banks is affected by the Fed's setting of the interest rate on these loans,called the

If the required reserve ratio is 15 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the M1 money multiplier is

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

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

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

The Fed can exert more precise control over ________ than it can over ________.

The increase in the currency ratio during World War II was due to

An increase in which of the following leads to a decline in the monetary base?

The variable that reflects the effect on the money supply of changes in factors other than the monetary base is the

When the Fed sells $100 worth of bonds to First National Bank,reserves in the banking system