Exam 17: Income, Poverty and Health Care

Even though the use of checks lower transaction costs when compared to the use of paper currency, it is unlikely that the use of paper or metallic currency will disappear entirely. Why?

Paper money in the U.S. is:

A change in the required reserve ratio changes:

A bank receives a demand deposit of $3,000. The bank loans out $1,800 of this deposit and increases its excess reserves by $300. What is the required reserve ratio?

Rising reserve requirements, other things being equal, would tend to:

Financial institutions are not very heavily leveraged, to prevent risk to the banking system.

Suppose you found $1,000 hidden in your mattress and deposited it in a demand deposit account at your bank. If the reserve requirement was 20 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.

If the required reserve ratio was 25 percent, a bank that received currency deposits of $16,000:

If a bank has $1 million in demand deposits, $400,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:

People continue to value money because they have confidence in its convertibility into goods and services.

If a bank receiving a new deposit of $200,000 would be able, as a result, to increase their lending by at most $120,000, then the required reserve ratio equals:

Bank runs ____ bank reserves and ____ the money supply.

"Near monies" are:

If the reserve requirement for a bank is $200,000 for a deposit of $1 million, then the money multiplier is:

M1 includes:

Which of the following changes would clearly decrease the supply of money in the banking system?

Calculate M1 and M2 using details from the table given below.

In its original role as lender of last resort, the Fed was supposed to:

Barter system is less desirable than using money for exchange because:

In the financial crisis of 2008, which of the following were not among the consequences of high leverage in the banking industry?