ECON chap 10 and 11

Assume reserve requirement is 10%. Lauren deposits $1 million in cash into her checking account, the deposit will initially increase excess reserves at first bank by

$900,000

The amount of money that the public wants to hold in the form of cash will

Decrease if intrest rates increase

A decrease in the required reserve ratio will cause the monetary multiplier and the money supply to change how

Increase and Increase

Assume the reserve requirement in 10%. If the central bank deposits $10,000 into the checking account of a private citizenship the money supply will

Increase by a maximum of $100,000

Which of the following sequence of events would be expected to occur if there were a reduction in the supply of money

Increase, Decrease, Decrease (IDD)

Assume that the public holds part of its money in cash and the rest in checking accounts. If the central bank lowers the reserve requirement from 16 to 8 percent the money supply will

increase by less than double

The money-creating ability of the banking system will be less than the maximum amount indicated by the monetary multiplier when

people take their loans in the form of cash instead of checkable deposits

assume the reserve requirement is 20%, but the banks don't loan out all their excess reserves. what would happen if the federal reserve were to deposit $1 million into the banking system

the money supply would increase by some amount less than $5million

to say that the federal reserve banks are quasi-public banks means that

they are privately owned, but managed in the public intrest