Exam 29: The Monetary System

Given the following information, what are the values of M1 and M2? Small time deposits $1,800 billion Demand deposits and other checkable deposits $1,000 billion Savings deposits $1,400 billion Money market mutual funds $1,000 billion Traveler's checks $50 billion Large time deposits $600 billion Currency $300 billion Miscellaneous categories in M2 $50 billion

When in France you notice that prices are posted in euros, this best illustrates money's function as

Trace the effects on the money supply when the Fed decreases the discount rate.

Which of the following is correct?

Economists use the word "money" to refer to

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

Suppose a bank is operating with a leverage ratio of 20. What is the maximum decrease in the market value of assets before the bank becomes insolvent?

When the federal funds rate is below the target rate, the Fed will bonds. This action will the money supply.

The members of the Federal Reserve's Board of Governors

The Fed decreases reserves if it conducts open market

In the United States, currency holdings per person average about

Which of the following items is included in M2?

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?

The federal funds rate is the interest rate

If people decide to hold more currency relative to deposits, the money supply

Which of the following best illustrates the unit of account function of money?

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

In the 19th century, when crop failures often led to bank runs, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, these actions by the banks should have

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. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assuming that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after the change in the reserve requirement?

The Board of Governors