Exam 24: The Aggregate Demandaggregate Supply Model

Table 9-5 Bolton Bank: Partial Balance Sheet (All figures in $ million) -Refer to Table 9-5. If the required reserve ratio is 10% and the market interest rate is 8%, what is Bolton Bank's opportunity cost of holding the excess reserves it is currently holding?

What happens to the value of the deposit multiplier when banks hold excess reserves?

Suppose the Fed conducts an open market sale of $50 million in government securities. If the required reserve ratio is 20%, what is the maximum change in the money supply? Assume that banks try not to hold excess reserves and there is no currency withdrawal from the banking system.

Membership in the Federal Reserve System

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. As a result of the open market sale, Jekyll Bank

The value of the simple money multiplier tends to be greater when individuals hold less cash.

Which of the following would lead to a change in the money measure, M1?

Increasing the reserve requirement ratio is

Suppose the required reserve ratio is 10%. Mr. Normal uses his ATM card to withdraw $1,000 from this checking account in California National Bank. This action has

Which of the following is an interest rate that is set directly by the Fed?

A financial intermediary is an institution that collects funds from lenders and distributes these funds to borrowers.

The functions of money are

Table 9-6: Deposit Expansion Stages In Table 9-6, assume that banks loan out 100% of their excess banking reserves, there are no cash withdrawals, and all loan proceeds are spent. Figures have been rounded up to the nearest whole number. -Refer to Table 9-6. What is the value of the deposit multiplier?

Table 9-6: Deposit Expansion Stages In Table 9-6, assume that banks loan out 100% of their excess banking reserves, there are no cash withdrawals, and all loan proceeds are spent. Figures have been rounded up to the nearest whole number. -Refer to Table 9-6. What is the value of $F (the total new checkable deposits)?

How does the Fed decide which monetary measure should be the focus of its monetary policy choices?

A primary function of a central bank is to

Which of the following describes the medium-of-exchange function of money?

Inflation reduces the ability of money to function as a

The required reserve ratio is the percentage of checkable deposits that must be held as reserves.

Credit cards are