Exam 16: The Monetary System

Scenario 29-2. The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. -Refer to Scenario 29-2. Assuming the only other thing Tazian banks have on their balance sheets is loans, what is the value of existing loans made by Tazian banks?

Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?

The money supply decreases if the Fed

Fiat money

When you purchase school supplies at the book store using cash, you are using money as a medium of exchange.

Money

Which of the following can banks use to borrow from the Federal Reserve?

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

M1 includes

The Fed can directly protect a bank during a bank run by

Scenario 29-1. The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits. -Refer to Scenario 29-1. Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply of Namdia change?

Because of the multiple tools at its disposal, the Fed can control the money supply very precisely.

Currency includes

The Fed sets the interest that borrowers pay on loans from

Money market mutual funds are included in

What is the change in the money supply when the Fed purchases $100 worth of bonds in a 100-percent-reserve banking system?

When colonists in Virginia used tobacco as money, their money

The New York Federal Reserve Bank

Treasury Bonds are

Which of the following is included in M2 but not in M1?