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