Exam 17: The Central Bank Balance Sheet and the Money Supply Process

Within two days following the September 11, 2001 terrorists attacks, the float in the banking system increased by almost a hundred fold.Float is an asset of the Fed since it represents loans being made to banks by the Fed, yet this dramatic increase in float caused the Fed to actually have to increase reserves to keep the payments system from coming to a halt.Explain why this was the case.

Considering a central bank's balance sheet, when the value of an asset increases:

Which of the following best completes the statement? If people increase their currency holdings, all else the same, the monetary base:

The monetary base is the sum of:

A central bank's purchase of securities made by writing checks on itself will:

If M = the quantity of money, m the money multiplier, MB the Monetary Base, C = Currency, D = Deposits, R = Reserves, RR equals required reserves, rD = the required reserve rate and ER = Excess reserves, then ER/D would equal the:

If Bank A sells a $100,000 U.S.Treasury bond to the Fed, Bank A's required reserves will:

If banks never held any excess reserves and if the currency holdings of the public never changed, do you think the Fed would still focus on an interest-rate target?

Most responsible central banks publish their balance sheet:

Total banking system reserves equal $58.65 billion.The total banking system checkable deposits subject to reserve requirements are $510 billion.The required reserves are $51 billion.What is the required reserve rate, and what is the excess reserve rate?

The experience of the Marcos Presidency in the Philippines in 1986 showed:

An open market sale of U.S.Treasury securities by the Fed will cause the Fed's balance sheet to show:

One trait a central bank has over other businesses including banks is that it:

If reserves do not earn any interest for the bank, why would a bank hold any excess reserves?

What happens to the monetary base if people, fearing a bank run, convert their checking deposits into currency holdings?

If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would:

Which of the following statements is most correct?

As a portion of total assets measured in billions of dollars, the least important asset on the Fed's balance sheet is:

Gold is:

An open market sale of U.S.Treasury securities by the Fed will cause the Banking System's balance sheet to show: