Econ Quiz 8

Suppose a bank's reserve ratio is 5 percent and the bank has $1000 in deposits. Its reserves amount to $5 $50 $95 $950

$50

If the reserve ratio is 12.5%, then $5600 of money can be generated by

$700 of new reserves

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

12.5%

IN the nation of X the money supply is 80,000 and reserves are 18,000. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

22.5%

The federal reserve is

a central bank, it is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks

Which of the following is a store of value? Currency US Gov Bonds Fine art All of the above

all of the above

If the public decides to hold more currency and fewer deposits in banks, bank reserves

decrease and the money supply eventually decreases

in 1991 the Federal Reserve lowered the reserve requirement ratio from 12% to 10%. Other things the same this should have

increased both the money multiplier and the money supply

In a fractional reserve banking system, a decrease in reserve requirements

increases both the money multiplier and the money supply

The fed can increase the money supply by conducting open market

purchases or lowering the discount rate