Chapter 34
Transactions demand for money
A consumer holds money to meet spending needs. This would be an example of the
Decreases the interest rate and increases aggregate demand
An increase in the money supply, ceteris paribus, usually
Decrease the excess reserves of member banks and thus decrease the money supply
If the Board of Governors of the Federal Reserve System increases the legal reserve ratio, this change will
An asset of the Federal Reserve Banks and a liability for commercial banks
Loans of the Federal Reserve Banks to commercial banks are
Turns required reserves into excess reserves
Lowering the reserve ratio
Manipulating the size of excess reserves held by commercial banks
The Federal Reserve alters the amount of the nation's money supply by
Federal funds rate
The interest rate that banks charge one another for the loan of excess reserves is the
Quantity of money supplied exceeds the quantity of money demanded
The interest rate will fall when the
Fed buys securities in the open market
The lending ability of commercial banks increases when the
Exchange rate
The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio and the following, except
Allow banks to increase their lending
The major purpose of the Federal Reserve buying government securities in open market operations is to
Interest rate
The transactions demand for money is least likely to be a function of the
A liability of the Federal Reserve Banks and an asset for the U.S. Treasury
U.S. Treasury deposits at the Federal Reserve Banks are
Total amount of money demanded increases
When the interest rate falls, the
Lower the reserve ratio
Which of the following Fed actions increases the excess reserves of commercial banks