ECON
with the reserve requirement of 5% and initial deposit of $400, what is the total amount of money that could be in the money supply?
$8,000
How does the Fed engage in expansionary monetary policy?
It buys bonds from financial institutions.
The purchase of existing US Treasury sdcurities by the Federal Reserve will
decrease the reserves at banks
Banks increase the money supply by
lending out funds to borrowers
open market operations involve the
the purchase or sale of bonds by a central bank
Today in the United States, the dollar is
fiat money
which of the following is not a function of fiat money?
A source of intrinsic value
Why is M2 currently a more monitored measure of the money supply than M1?
ATMs have allowed easier access to savings deposits
if the government were to print more money which of the following would occur?
Both M1 and M2 would increase.
If Ann were to convert some of her checkable deposits into a certificate of deposit, which of the following changes would take place?
M1 would decrease; there would be no change in M2.
to increase the money supply, the federal reserve could
conduct an open market purchase of Treasury securities.
Using a credit card is most like
a short-term loan from a bank.
A bank can make loans when
excess reserves are greater than zero.
Discount loans are
loans from the Fed to private banks
According to the models studied in this chapter, monetary policy is
more effective in the short run
In the short run, expansionary monetary policy___ real gross domestic product, _ unemployment, and _ the price level
raises;lowers;raises