Eco questions
Suppose that the Currensy deposit ratio is .40 in the reserve deposit ratio is .15 according to the information the money multiplier is approximately
1.95
According to the board of governors in August 2008, reserves equaled 44 billion, currency in circulation equals 777 billion and checking deposits were 300 billion. The monetary base was blank and the MI money supply it was blank
1077 billion and 344 billion
In a 100% reserve banking system, banks
Cannot affect the money supply
To increase the monetary base the fed can
Conduct open market purchases
The monetary base minus reserves equals
Currency in circulation
The monetary base consists of
Currency in circulation and reserve it's the same
When the Federal Reserve sells a government bond to a bank, reserves in the banking system blank and the monetary base blank, everything else held constant
Decrease decreases
If the Federal Reserve wishes to increase the money supply it should
Decrease the discount rate
All else held constant when the Fed called in a $100 discount loan previously extended to the first national bank, reserves in the banking system
Decreased by $100
When the Fed makes an open market sale, it
Decreases the monetary base
The interest rate the Fed charges banks borrowing from the Fed is the
Discount rate
In a fractional reserve banking system, banks create money when they
Except
When the Fed increases the discount rate it
Is likely to decrease the monetary base
Open market operations change the blank changes in the interest rate paid on reserve change the blank and changes in the discount rate change the blank
Monetary base; money multiplier; monetary base
If the Federal Reserve increases the interest rate paid on reserves, the bank will tend to hold blank excess reserves, which will blink the money multiplier
More; decrease
Quantitive easing is most closely akin to
Open market operations
The most frequently used tool of monetary policy is
Open market operations
Which of the following can the Fed used to control the money supply
Print money
There are two ways in which the fed can provide additional reserves to the banking system; it can blank government bonds or it can blank discount loans to commercial banks
Purchase; extend
It's cold to prevent thanks from using excess reserves to make loans I would increase the money supply the Federal Reserve could conduct open market blank and blank the interest rate paid on bank reserves
Sales; raise
Both blank and blank are Federal Reserve assets
Securities and loans to financial institutions
Excess reserves are reserves that banks keep
Above the legally required amount
In a system with fractional reserve banking
All banks must hold reserves equal to a fraction of their deposits
In the United states bank reserves consist of
Both cash and deposit at the Federal Reserve
Supposedly multiplier is 2.75 and the monetary base equals 1.5 billion according to this information the money supply is approximately
$4125
A customer deposits $10,000 in a bank account. If the reserve requirement or 15% how much can the bank make in new loans
15,000
According to the quantity theory of money if money is growing at a temper cent rate and the real output is growing a 3% rate but velocity is growing at an increasingly faster rate over time as a result of financial innovation the rate of inflation must be
7%
If the Fed wishes to conduct and expansionary open market operations it should
Auction money through the term auction facility
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 blank, the open market purchase has no effect on reserves; if the proceeds are kept as blank reserves increased by the amount of the open market purchase.
Currency ; deposits
The monetary liabilities of the Federal Reserve include
Currency in circulation and reserves
The monetary base consists of
Currensy held by the public plus reserves held by the bank
The national economic objectives that the Fed attempts to achieve include all of the following actions except A-promoting economic growth accompanied by full employment B-maintaining moderate long-term interest rates C-keeping the price level stable D-keeping tax rates below
D keeping tax rates low
Which of the following is not a policy tool of the Federal Reserve
Open market operations
Total reserves minus bank deposits with the Fed equals
Volt cash
Everything else being the same if depositors decrease their balances in their checking account and increase their currently
The monetary base decreases
When the Fed increases the interest rate it pays banks on the reserves and
The money multiplier increases
If you hear in the news that the Federal Reserve conducted open market purchases, then you should expect blank to increase
The money supply
Currency equals
The sum of funds in checking accounts
Credit cards
Are part of both the MI and the M2 money supply
When the Federal Reserve extenze a discount loan to a bank, the monetary base blank and the reserves blank
Increase; increase
When the Fed buys $100 worth of bonds from the first national bank reserves in the banking system
Increased by $100
When the Fed increases the interest rate paid on reserves it
Increases the reserve deposit ratio
If the Federal Reserve raises the blank, the amount of discount loans blank and the money supply blank
Reserve rate; rises; rises
If there's no currency in the proceeds of all loans are deposited somewhere in the banking system and if rr denotes the reserve deposit ratio than the total money supply is
Reserves divided by rr
Compared to typical open market operations one pursuing quantitative easing, Federal Reserve purchases tend to be blank securities
Riskier and longer-term
