ECO Quiz 5
If the bank has $2000 in deposits and the RRR is 10%, what is the maximum amount they are allowed to loan out?
(2000 x .10 = 1800)
M2 includes M1 plus:
-Savings account balances -Money market deposit accounts in banks -Small denomination time deposits -Non-institutional money market fund shares
The sell of Treasury securities by the federal Reserve will, in general:
Decrease the quantity of reserves held by banks
Kristy deposits $10,000 in her account, RRR=20%, checking account deposits in the banking systems a whole could eventually increase up to a maximum of?
Initial Investment x (1/RRR) 10,000 x (1/.20) = 50,000
The largest proportion of M1 is made up of
Checking account Deposits
Silver is an example of:
Commodity Money
An increase in the discount rate _______ bank reserves and ________ the money supply if the banks respond appropriately to the change in the discount rate.
Decreases; Decreases
Discount Rate
The discount rate is the interest rate the FED charges to banks for loan from the FED.
The statement "This dell laptop costs $1,200" illustrates which function of money?
Unit of account
People hold money as opposed to financial assets because money:
is perfectly liquid