Exam 11: The Monetary System

If the reserve ratio is 12.5 percent, then $1,000 of additional reserves can create up to

Which of the following best illustrates the medium of exchange function of money?

Which of the following does the Federal Reserve not do?

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

If a bank uses $500 of excess reserves to make a new loan when the reserve ratio is 8 percent, this action by itself initially makes the money supply

The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept

The Fed bonds when it conducts an open-market purchase. This action the money supply.

When the Fed buys government bonds,

People hold $400 million of bank deposits but no currency. Banks have made $380 million dollars of loans and only hold enough reserves to satisfy reserve requirements. Because of uncertainty, banks choose to hold $10 million more in reserves. The Fed takes no action. What happens to bank loans?

The rate at which the Fed lends money to banks is

One plausible explanation for the large amount of U.S. currency outstanding is that many dollars are held abroad.

When colonists in Virginia used tobacco as money, their money

The discount rate is the interest rate that

Economists use the term "money" to refer to

The money supply increases when the Fed

Treasury Bonds are

Which of the following institutions is a central bank?