Exam 24: The Nature and Creation of Money

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If you withdraw currency from your savings account, you are

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Which of the following statements is true?

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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

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Suppose a bank has $50,000 in deposits and $6,000 in reserves.The required reserve ratio is 10%.Which of the following occurs if the required reserve ratio is increased to 12%?

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Money, like other assets such as durable goods, stocks, and bonds is a way of transferring purchasing power from the present to the future but money is different from these other assets because it is a medium of exchange while the other assets are not.

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The deposit multiplier is the inverse of

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When a person makes price comparisons among products, money is being used as a(n)

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

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The functions of money are

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When her $1,000 time deposit expires, Suneeta decides not to renew the time deposit and opts to cash out.As a result of her transaction

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When the Fed _______ governments bonds it _______ bank reserves.

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Which of the following is part of M1? I.currency in a bank's vault II.cash in your purse III.checkable deposits IV.savings deposits

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When the Fed purchases government bonds it _____ reserves and ____ the money supply.

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The rate of interest charged for reserves in the federal funds market is the

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

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What is the interest rate earned on the reserves that bank's keep at the Fed?

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

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The Federal Depository Insurance Corporation (FDIC)has the power to close a bank when

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

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When a member bank borrows reserves from the Fed,

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