Exam 14: Money,banks,and the Federal Reserve System

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The purchase of $1 million of Treasury securities by the Federal Reserve,if there is no change in the quantity of currency,will cause reserves at banks to

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Which of the following assets is most liquid?

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If the required reserve ratio is 100 percent,could the Federal Reserve still change the money supply with open market operations? Explain whether they could or could not.

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The Federal Reserve could still change the money supply,because the initial purchase or sale of government securities would change checking account deposits.For instance,if the Fed purchases a $1,000 government bond from you and you deposit the funds in the bank,then checking account deposits and the money supply would go up $1,000.The simple deposit multiplier with a 100 percent required reserve ratio would equal one,not zero,so an increase in reserves still increases checking account deposits.

If households and firms decide to hold less of their money in checking account deposits and more in currency,then initially,the money supply

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Suppose you transfer $2,000 from your mutual fund account to your checking account.What is the immediate impact of this transfer on M1 and M2?

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The process of bundling loans together and buying and selling these bundles in a secondary financial market is called

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The Federal Open Market Committee consists of the seven members of the ________,the president of the Federal Reserve Bank of New York,and ________.

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Scenario 14-2 Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. -Refer to Scenario 14-2.As a result of Kristy's deposit,Bank A's required reserves increase by

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If banks receive a greater amount of reserves and do not hold all of these reserves as excess reserves,the money supply expands.

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A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.

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The quantity equation states that

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In an economy with ________,there are more prices than in an economy with ________.

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With a required reserve ratio of 20 percent,an increase in reserves of $10,000 could lead to a maximum increase in checking account deposits in the entire banking system of

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The statement "This Dell laptop costs $1,200" illustrates which function of money?

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Refer to the Article Summary.In 2015,the European Union initiated the BRRD program,where the burden of bailing out troubled banks is being placed on bank creditors,shareholders,and possibly depositors.If this program were to confiscate funds from bank deposits to assist troubled banks,the possibility of a bank run,a situation in which ________,would likely increase.

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Suppose Warren Buffet withdraws $1 million from his checking account at Chase Bank.If the required reserve ratio is 20 percent,what is the maximum change in deposits in the banking system?

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The velocity of money is defined as

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A bank's assets are

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Refer to the Article Summary.Prior to the initiation of the BRRD,the European Union had essentially been bailing out troubled banks.In doing this,the EU was,in effect,acting as a

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Using the quantity equation,if the velocity of money grows at 5 percent,the money supply grows at 10 percent,and real GDP grows at 4 percent,then the inflation rate will be

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