chapter 16
Definition of Commodity Money
money with intrinsic value
) Suppose a bank has 20% reserve requirement, $10,000 in deposits and has loaned out all it can, given the reserve requirement:
Bank should a keep Reserve of =$2,000; loan out=$8,000
If reserve ratio increases from 10% to 20%, the money multiplier would
Money Multiplier is the inverse of Required Reserve; M= 1/R
On the bank T accounts
Reserves are assets and deposits are liabilities.
Which of the following is correct?
The Federal Reserve has 12 regional banks; the board of governors has 7 members who serve 14 year terms.
The Federal Reserve does all except which of the following?
a) Control supply of money b) Control value of money c) Regulate banking system d) MAKE LOANS TO INDIVIDUALS (this is the correct answer)
M1 Narrowest definition of U.S. money supply.... M1 includes?
a) currency b) demand deposits c) travelers checks d) ALL THE ABOVE (is the correct answer)
Definition of the Federal Fund Rate
interest rate at which banks lend reserves to each other overnight.
Definition of Fiat money
money with no intrinsic value.
Definition of Money
those assets regularly used to buy goods and services
