ECO 201 Ch 11

Other things the same if reserve requirements are decreased, the reserve ratio

decreases, the money multiplier increases, and the money supply increases

Credit cards

defer payments

Which of the following will not help to prevent bank runs?

fractional reserve banking

You use US currency to pay the owner of a restaurant for a delicious meal. The currency

has no intrinsic value. The exchange is not an example of barter

Other things the same, if reserve requirements are increased, the reserve ratio

increases, the money multiplier decreases, and the money supply decreases

Refer to Table 29-5. If the bank faces a reserve requirement of 8 percent, then the bank

is in a position to make a new loan of $14,000

If the money multiplier is 3 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

it increases by $150,000

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

its required reserves increase by $40

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

medium of exchange

The agency responsible for regulating the money supply in the United States is

the Federal Reserve

When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,

those assets are government bonds and the Fed's reason for selling them is to decrease the money supply

Economists use the term "money" to refer to

those types of wealth that are regularly accepted by sellers in exchange for goods and services

Which of the following is included in M1 and M2?

traveler's checks

If the reserve ratio is 8 percent, then an additional $800 of reserves can increase the money supply by as much as

$10,000

The manager of the bank where you work tells you that the bank has $300 million in deposits and $255 million dollars in loans. If the reserve requirement is 8.5 percent, how much is the bank holding in excess reserves?

$19.5 million

Refer to Table 29-4. Starting from the situation as depicted by the T-account, if someone deposits $500 into the First Bank of Fairfield, and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans that it makes will be

$437.50

If R represents the reserve ratio for all banks in the economy, then the money multiplier is

1/R

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

12.5 percent

Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

9.1

At any given time, the voting members of the Federal Open Market Committee include

All of the above are correct

Which of the following is correct concerning the FOMC?

All of the above are correct

Which of the following pairs of vendors has a double coincidence of wants?

Amanda and Eric

The agency responsible for regulating the US monetary system is the

Federal Reserve

The banking system currently has $200 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 4 percent. If the Fed raises the reserve requirement to 10 percent and at the same time buys $50 billion worth of bonds, then by how much does the money supply change?

It falls by $2,500 billion

Who was appointed Chair of the Board of Governors in 2014 by President Barack Obama?

Janet Yellen

Demand deposits are included in

M1 and M2

Which of the following is an example of commodity money?

The gold standard

Bank runs

are a problem because banks only hold a fraction of deposits as reserves

The members of the Federal Reserve's Board of Governors

are appointed by the president of the US and confirmed by the US Senate

All of the presidents of the regional Federal Reserve banks

attend each FOMC meeting

The federal funds rate is the interest rate

banks charge each other for short-term loans of reserves

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

buying bonds. This buying would increase reserves

Which of the following is a store of value?

cash and stocks

Which type of money has intrinsic value?

commodity money

In the US, the average adult holds about $4,490 in

currency