MACRO, Chapter 34, 35, & 36

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

If you are estimating your total expenses for school next semester, you are using money primarily as

a unit of account

Assets Liabilities and Net Worth Reserves $30 Checkable Deposits $300 Loans 130 Stock Shares 130 Securities 70 Property 200 Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 10 percent. All figures are in billions. The commercial banking system has excess reserves of

$0 billion.

Type of Deposit Reserve Requirement Checkable Deposits $7.8 - 48.3 Million 3% Over $48.3 Million 10 Noncheckable personal savings and time deposits 0 Refer to the accompanying table. If a bank has $60 million in savings deposits and $40 million in checkable deposits, then its required reserves are

$1.2 million.

Assets Liabilities and Net Worth Reserves $51 Checkable Deposits $140 Loans 109 Stock Shares 130 Securities 100 Property 10 Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in billions. The maximum amount by which the commercial banking system can expand the supply of money by lending is

$30 billion.

Assets Liabilities and Net Worth Reserves $30 Checkable Deposits $300 Loans 130 Stock Shares 130 Securities 70 Property 200 Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 10 percent. All figures are in billions. After the deposit of $10 billion of new currency, the maximum amount by which this commercial banking system can expand the supply of money by lending is

$90 billion.

Assume that a bank initially has no excess reserves. If it receives $5,000 in cash from a depositor and the bank finds that it can safely lend out $4,500, the reserve requirement must be

10%

The blurring of the lines separating the subsets of the financial industry started in the

1990s.

Answer the question on the basis of the table, in which columns (1) and (2) indicate the transactions demand (Dt) for money and columns (1) and (3) show the asset demand (Da) for money. (1) Interest Rate (2) Dt (3) Da 12% $100 $0 10 100 20 8 100 40 6 100 60 4 100 80 2 100 100 If the money supply is $160, the equilibrium interest rate will be

6 percent.

Which of the following best describes the cause-effect chain of an expansionary monetary policy?

An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.

As it relates to Federal Reserve activities, the acronym FOMC describes the

Federal Open Market Committee.

Which of the following best describes what occurs when monetary authorities sell government securities?

There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing a decrease in investment spending and real GDP.

The problem of cyclical asymmetry refers to the idea that

a restrictive monetary policy can force a contraction of the money supply, but an expansionary monetary policy may not achieve an increase in the money supply.

The seven members of the Board of Governors of the Federal Reserve System are

appointed by the president with the confirmation of the Senate.

Disequilibrium in the money market is mainly corrected via a change in

bond prices.

The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?

buying government securities, doing repos, and lowering the discount rate

A commercial bank can expand its excess reserves by

demanding and receiving payment on an overdue loan.

Which of the following is correct? When the Federal Reserve buys government securities from the public, the money supply

expands and commercial bank reserves increase.

The market for immediately available reserve balances at the Federal Reserve is known as the

federal funds market.

If the Fed wants to discourage commercial bank lending, it will

increase the interest paid on excess reserves held at the Fed.

Collateralized default swaps

insured holders of loan-backed securities in case the underlying loans were not repaid.

Refer to the given list of assets. 1. Large-denominated ($100,000 and over) time deposits 2. Noncheckable savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults The M2 definition of money includes

items 2, 3, 4, 6, 7, and 8.

A bank that has assets of $85 billion and a net worth of $10 billion must have

liabilities of $75 billion.

Joe deposits $200 in currency into his checking account at a bank. This deposit is treated as

no change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits.

Money is "created" when

people receive loans from their banks.

The Federal Reserve System performs the following functions except

providing banking services to the general public

The purpose of a restrictive monetary policy is to

raise interest rates and restrict the availability of bank credit.

The Federal Reserve can increase aggregate demand by

reducing the discount rate.

(Last Word) During the financial crisis of 2007-2008, the Federal Reserve

served as a lender of last resort to both solvent and insolvent firms.

Assume the Standard Internet Company negotiates a loan for $5,000 from the Metro National Bank and receives a checkable deposit for that amount in exchange for its promissory note (IOU). As a result of this transaction,

the supply of money is increased by $5,000.

If the price index rises from 100 to 120, the purchasing power value of the dollar

will fall by one-sixth.


संबंधित स्टडी सेट्स

Exam FX Chapter 1 Completing the Application, Underwriting, and Delivering the Policy

View Set