Exam 9: The Nature and Creation of Money

When banks hold more reserves than are required, such reserves are called

Which of the following is an example of a bank's assets?

Table 9-3 Balance Sheet of the Alpha-Beta Bank (All figures in $ million) -Refer to Table 9-3. If the required reserve ratio is 10%, what is the value of the bank's required reserves?

Rank the following items in terms of most liquid to least liquid.

Which of the following equations is correct?

The largest component of M1 is

When a member bank borrows reserves from the Fed,

Suppose the Fed sells $1,000 of government securities to Commercial Banks. Which pair of the T-accounts below shows this transaction?

The discount rate

The unit-of-account function of money means that money is used

Assume that banks do not hold excess reserves, all deposits remain in the banking system and that the required reserve ratio is 20%. If one bank obtains excess reserves of $10,000, then the maximum increase in money supply is

Linda sells her Economics textbook to Ejere for $40. Ejere pays Linda with a check, which she deposits in her checking account in West Bank. Which statement below describes the check-clearing process?

When the Fed buys government bonds in the open market the money supply will increase.

Explain the differences between the two money measures, M1 and M2. Why are checks, debit cards, and credit cards not considered to be money?

Which of the following is a store of value and a common medium of exchange?

In 2008, commercial banks' share of the U.S. credit market changed as a result of

Scenario 2: Fed sells bonds to Henry Hyde Consider a banking system in which the reserve requirement is 10%, banks try not to hold excess reserves, consumers and firms hold money only in the form of checking account balances, and all loan proceeds are spent. Suppose initially all banks in the system are loaned up. Now, suppose that the Fed sells a $50,000 bond to Henry Hyde, who pays for the bond by writing a check drawn against Jekyll Bank. -Refer to Scenario 2. Once the full impact of the Fed's open market sale works its way through the banking system, what is the maximum change on the money supply as a result of these two events?

When the Federal Reserve conducts open market transactions, it

Which of the following are primary functions of a central bank? I. act as a regulator of banks II. issue government bonds III. set monetary policy IV. regulate dividend payments by corporations

The ease with which an asset can be converted to money is its