353 test 2

increase the size of their balance sheet.

A central bank's purchase of securities made by writing checks on itself will:

accounts of commercial banks.

A liability of the central bank in functioning as the bankers' bank is:

no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing

An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show

a decrease in the asset of securities and a decrease in the liability of reserves.

An open market sale of U.S. Treasury securities by the Fed will cause the Fed's balance sheet to show

gold.

As a portion of total assets measured in billions of dollars, the least important asset on the Fed's balance sheet is

securities.

As a portion of total assets measured in billions of dollars, the most important asset on the Fed's balance sheet is

more than $1 million but less than $10 million.

Assume that the required reserve rate is ten percent, banks want to hold excess reserves in an amount that equals three percent of deposits, and the public withdraws ten percent of every deposit in cash. An open market purchase of $1 million by the Fed will see banking system deposits increase by:

$5 million

Bank A has checkable deposits of $100 million, vault cash equaling $1 million and deposits at the Fed equaling $14 million. If the required reserve rate is ten percent what is the maximum amount Bank A could lend?

an increase in the asset category of securities and the liability category of reserves by $2 billion.

Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will show

mortgage backed securities.

During the 2007-2009 financial crisis which of the following temporarily became the largest component of assets on the Fed's balance sheet

moved in opposite directions; the monetary base increased but M2 decreased.

During the early years of the Great Depression, the monetary base and M2:

currency.

Each of the following items would appear as assets on the central bank's balance sheet, except

MB

If M = the quantity of money, m, the money multiplier, MB, the Monetary Base, C =Currency, D = Deposits, R = Reserves, RR = required reserves, and ER = Excess reserves, then C + R would equal:

1/rD

If required reserves are expressed by RR; the required reserve rate by rD and deposits by D, the simple deposit expansion multiplier is expressed as:

double.

If the Fed were to decrease the required reserve rate from ten percent to five percent,the simple deposit expansion multiplier would:

An increase of $10 million

If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed will result in what change in loans?

increase.

If there were an increase in the number of bank failures, we should expect the amount of excess reserves in the banking system to:

decreasing by $50 million.

If we assume a ten percent required reserve rate, and banks not holding any excess reserves and no change in currency holdings, an open market sale of $5 million of U.S. Treasury securities by the Fed, will result in deposits:

the monetary base is smaller than M1 and M2 is larger than M1.

In dollar amounts:

discount loans.

In the U.S., loans made by Federal Reserve to banks fall in the categories of:

reserves.

Monetary policy operations for central banks are run through changes in the liability category of

the money multiplier is unstable over time.

One thing the Fed has learned over the past twenty-five years is:

currency in the hands of the public and reserves in the banking system.

The monetary base is the sum of:

the currency-to-deposit ratio is much higher today.

The money multiplier is much lower today than it was twenty-five years ago because:

ignores the fact people might change their currency holdings.

The simple deposit expansion multiplier is really too simple for understanding the link between changes in a central bank's balance sheet and the quantity of money in the economy because it

provide collateral.

To obtain a discount loan from the Fed, a commercial bank must:

an increase in assets and liabilities.

When the Fed makes a discount loan, the impact on the Fed's balance sheet will reflect

does not change but the quantity of M2 will decrease.

Which of the following best completes the statement? If people increase their currency holdings, all else the same, the monetary base: