Macro ECO pre-lecture assignment 11 Chapter 14

12

How many Federal Reserve districts are there?

many banks experience runs at the same time.

A bank panic occurs when:

$1,000 billion in deposits. (I did this by doing 100 billion x (1/0.10)= 1,000)

Assume that banks are always fully loaned and people hold no cash. Given a required reserve ratio of 10%, an infusion of $100 billion in reserves will result in a maximum of:

each additional dollar of reserves creates $5 of deposits.

Assuming there are no leakages out of the banking system, a money multiplier equal to 5 means that:

not part of the money supply.

Credit cards are:

loans are the most important asset. (Deposits are the bank's highest liability)

On the balance sheet of a bank:

$400. (I did this by doing 100 x (1/0.25) = 400)

Suppose that the reserve ratio is 25% and that banks loan out all their excess reserves. If a person deposits $100 cash in a bank, checking account balances will increase by a maximum of:

$1.5 billion. (I did this by doing 3 x 500 = 1,500, which I just assumed was 1.5 billion).

Suppose that velocity is 3 and the money supply is $500 million. According to the quantity theory of money, nominal output equals:

Seven, 14-year terms, President

The Board of Governors of the Federal Reserve has _________ members that are appointed for staggered _________ by the __________ and confirmed by the Senate.

open market operations.

The Fed conducts monetary policy primarily through:

the central bank of the United States

The Federal Reserve System is __________.

Monetary policy

The actions the Federal Reserve takes to manage the money supply and interest rates in order to pursue economic objectives are called __________.

required reserves

The name given to the fraction of deposits that a bank is legally required to hold in its vault, or as deposits at the Fed, is __________.

M1

The sum of all currency in the hands of the public plus demand deposits and other checkable deposits plus traveler's checks is the official definition of:

quantity theory of money. (This theory was proven to be incorrect because velocity changes).

The theory concerning the link between the money supply and the price level that assumes the velocity of money is constant is called the:

buy U.S. Treasury securities from the public.

To increase the money supply, the FOMC directs the trading desk located at the Federal Reserve Bank of New York to:

has no value except as money

U.S. currency is fiat money which means it __________.

V = (P x Q) / M , Or in your textbook V = (P x Y) / M

Velocity is defined as:

a bank run

When many depositors decide simultaneously to withdraw their money from a bank, there is __________.

Prices are quoted in terms of money.

When we say that money serves as a unit of account, we mean that:

provides funds to troubled banks that cannot find any other source of funds.

When we say that one of the functions of the Fed is to be a lender of last resort, we mean that the Fed:

The Federal Open Market Committee

Which body of the Federal Reserve System sets the majority of U.S. monetary policy?

The Fed was created in 1913.

Which of these facts is true about the creation of the Federal Reserve System (the Fed)?

If the money supply grows at a faster rate than real GDP, there will be inflation.

Which of these predictions can be made using the growth rates associated with the quantity equation?

The chairperson of the Board of Governors

Who is the chairperson of the Federal Open Market Committee (FOMC)?