Exam 8: Money, the Price Level, and Inflation

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

Sam has $500 in traveler's checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately,

Bank reserves include I. the cash in the bank's vault. II. the bank's deposits at the Federal Reserve.

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

Liquidity is the

-The table above shows information on the quantity of money and the money demand schedules. Suppose that the interest rate is equal to 3 percent. The effect of this interest rate in the money market is that

On the Fed's balance sheet, assets include

Checks ________ money and credit cards ________ money.

Which of the following is included in M1?

A savings bank is a depository institution that

The Federal Reserve reports that it has coins valued at $10 billion, bank reserves at the Fed of $15 billion, gold valued at $10 billion, Federal Reserve notes of $400 billion, and U.S. government securities of $300 billion. What is the size of the monetary base?

What is the relationship between money growth and inflation across countries? Does your answer support the quantity theory of money?

In response to the financial crisis of 2007 and the ensuing recession, the Fed announced three rounds of "quantitative easing," where the Fed purchased billions of dollars of securities. What impact would quantitative easing have on the monetary base?

Explain how a currency drain affects the size of the money multiplier. In your explanation, suppose that a bank gains $1 million in new deposits and reserves. Further suppose that the desired reserve ratio is 10 percent and the currency drain is 50 percent.

Money market mutual funds invest in

The sale of government securities by the Fed leads to

The quantity theory of money argues that, in the long run, the percentage change in money will create an equal percentage change in

Between 2008 and 2009, U.S. real GDP decreased from $13.2 trillion to $12.9 trillion. As a result, the real demand for money ________ and the demand for money curve ________.

Which part of the Federal Reserve System meets every 6 weeks to determine the nation's monetary policy?

A depository institution receives deposits from lenders and makes loans to borrowers.