Exam 13: Money and the Banking System

In practice, the Board of Governors and the chairperson of the Federal Reserve have the real control over monetary policy.

Traveler's checks are included in

Suppose Ariana deposits $75,000 in her bank. If the reserve ratio is 20 percent, this will lead to a maximum increase of ________ in checking account balances throughout all banks.

In the 1980s, a new category entitled ________ was added to M1.

Given the following information about AAA bank: Bank Deposits $50,000 Loans 25,000 Required Reserves 15,000 Excess Reserves 10,000 What is the reserve ratio?

Explain why the money supply does not change when one individual writes a check to another.

Which one of the following would lead to an eventual change in the total money supply?

An increase in checking account balances equals the initial deposit multiplied by total reserves.

If the reserve ratio is 4 percent, the money multiplier is equal to 25.

Money solves the problem of double coincidence of wants that would regularly occur under a system of credit.

Recall the Application about the Brazilian city of Silva Jardim that has issued its own local currency to answer the following question(s). In order to entice local residents to spend their money on stores in town, the small city of Silva Jardim in Brazil, hatched a plan for its own currency. The currency is called the capivari and features a picture of a local rodent on the bills. The capivaris are issued by a local bank, which holds one unit of official Brazilian currency for each capivari it issued. Local merchants, however, give discounts for paying in capivaris so that local residents are therefore encouraged to make local purchases. -According to this Application, the small city of Silva Jardim in Brazil has issued its own currency called the capivari. If people using the currency have enough confidence in this locally-issued scrip to hold onto it for use in future transactions, the currency will be acting as a

If the prices of goods and services were expressed in terms of carved wooden beads, then the carved wooden beads would be serving as a

List four of the Federal Reserve's key functions.

One of the essential functions that a bank performs is

Members of the Federal Reserve Board of Governors

What is a commodity money system?

The stored value of money over time should not change significantly as long as the level of inflation is

According to the U.S. Secret Service, approximately $2.6 billion of U.S. paper currency in circulation is counterfeit. Undetected counterfeit currency which is spent and circulated in the marketplace is an example of the counterfeit currency being used as a

The chairman of the Federal Reserve Board of Governors

If the banking system has a required reserve ratio of 40 percent, then the money multiplier is