Chapter 34

Transactions demand for money

A consumer holds money to meet spending needs. This would be an example of the

Decreases the interest rate and increases aggregate demand

An increase in the money supply, ceteris paribus, usually

Decrease the excess reserves of member banks and thus decrease the money supply

If the Board of Governors of the Federal Reserve System increases the legal reserve ratio, this change will

An asset of the Federal Reserve Banks and a liability for commercial banks

Loans of the Federal Reserve Banks to commercial banks are

Turns required reserves into excess reserves

Lowering the reserve ratio

Manipulating the size of excess reserves held by commercial banks

The Federal Reserve alters the amount of the nation's money supply by

Federal funds rate

The interest rate that banks charge one another for the loan of excess reserves is the

Quantity of money supplied exceeds the quantity of money demanded

The interest rate will fall when the

Fed buys securities in the open market

The lending ability of commercial banks increases when the

Exchange rate

The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio and the following, except

Allow banks to increase their lending

The major purpose of the Federal Reserve buying government securities in open market operations is to

Interest rate

The transactions demand for money is least likely to be a function of the

A liability of the Federal Reserve Banks and an asset for the U.S. Treasury

U.S. Treasury deposits at the Federal Reserve Banks are

Total amount of money demanded increases

When the interest rate falls, the

Lower the reserve ratio

Which of the following Fed actions increases the excess reserves of commercial banks