Exam 8: Money, the Price Level, and Inflation

If nominal GDP equals $10 trillion and the velocity of circulation is 5, then

Which of the following is TRUE regarding the Federal Open Market Committee (FOMC)?

Which of the following is the most liquid?

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank has desired reserves of

Which of the following does NOT describe a function of money?

The Federal Open Market Committee consists of the

A depository institution is a firm that takes deposits from ________ and makes loans to ________.

In the economy of Brightland, the commercial banks have deposits of $600 billion. Their reserves are $60 billion. All reserves are in deposits with the Central Bank and the commercial banks hold no excess reserves. There is $120 billion in Central Bank notes outside the banks, and there are no coins. a) What is the economy's monetary base? b) What is the quantity of money in the economy? c) Calculate the money multiplier. d) Suppose the Central Bank of Brightland undertakes an open market purchase of securities of so that the monetary base increases by $5 billion. By how much will the quantity of money change?

A bank has checking deposits of $400, saving deposits of $900, time deposits of $900, loans of $950, government securities of $900, outstanding credit card balances of $400, currency in its vault of $40, and deposits in its reserve account at the Fed of $40. a) What is the amount of this bank's deposits that are in M1? b) What is the amount of this bank's deposits that are in M2? c) What is the amount of this bank's reserves?

The quantity of money is $1 billion, the price level is 1.10, and real GDP is $10 billion. What is the velocity of circulation?

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

Suppose that the interest rate is greater than the equilibrium interest rate. Which of the following occurs? I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls.

If the Fed buys $100,000 in U.S. government securities from a commercial bank, the bank now has an additional $100,000 of

Other things constant, the quantity theory of money concludes that any increase in the quantity of money

If the Fed sells government securities

M2

Does the Federal Reserve conduct both the nation's monetary policy and its fiscal policy?

Which of the following is TRUE? I. Checks are considered money because they can be used as a medium of exchange. II. Checks represent a transfer of money.

Suppose prices are quoted in dollars and transactions are conducted in pesos. The dollar serves as a

After you finish your degree, suppose your salary is $52,000 per year. This is an example of money as