Chapter 14 for Econ: The Money Supply Process Part 1

Total reserves minus vault cash equals A) bank deposits with the Fed B) excess reserves C) required reserves D) currency in circulation

A

When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system A) increase by $100 B) increase by more than $100 C) decrease by $100 D) decrease by more than $100

A

Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank has _____ million dollars in excess reserves A) 3 B) 9 C) 10 D) 11

C

The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds. If the proceeds are kept in ________, the open market purchase has no effect on reserves; if the proceeds are kept as ________, reserves increase by the amount of the open market purchase. A) deposits; deposits B) deposits; currency C) currency; deposits D) currency; currency

C

The sum of the Fed's monetary liabilities is called A) the money supply B) currency in circulation C) bank reserves D) the monetary base

D

Total reserves are the sum of ________ and ________. A) excess reserves; borrowed reserves B) required reserves; currency in circulation C) vault cash; excess reserves D) excess reserves; required reserves

D

When the Federal Reserve sells a government bond to a bank, reserves in the banking system ________ and the monetary base ________, everything else held constant. A) increase; increases B) increase; decreases C) decrease; increases D) decrease; decreases

D

Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and nine million dollars in excess reserves. Given this information, we can say First National Bank has _____ million dollars in required reserves A) 1 B) 2 C) 8 D) 10

A

Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank faces a required reserve ratio of ________ percent. A) 10 B) 20 C) 80 D) 90

A

The monetary base minus currency in circulation equals A) reserves B) the borrowed base C) the non-borrowed base D) discount loans

A

Total reserves minus bank deposits with the Fed equals A) vault cash B) excess reserves C) required reserves D) currency in circulation

A

The monetary liabilities of the Federal Reserve include A) government securities and discount loans B) currency in circulation and reserves C) government securities and reserves D) currency in circulation and discount loans

B

The players in the money supply process include: A) banks, depositors, borrowers and the US Treasury B) banks, depositors, the central bank, and the US Treasury C) banks, depositors, the central bank, and borrowers D) banks, borrowers, the central bank, and the US treasury

B

Both ________ and ________ are Federal Reserve assets. A) currency in circulation; reserves B) currency in circulation; government securities C) government securities; discount loans D) government securities; reserves

C

When the fed calls in a $100 discount loan previously extended to a bank, reserves in the banking system A) increase by $100 B) increase by more than $100 C) decrease by $100 D) decrease by more than $100

C

C

The monetary base consists of A) currency in circulation and Federal Reserve notes B) currency in circulation ad US Treasury monetary liabilities C) currency in circulation and reserves D) reserves and Federal Reserve Notes