Exam 8: Money, the Price Level, and Inflation

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

An increase in real GDP

A bank's required reserves are calculated by multiplying ________ by the required reserve ratio.

The discount rate is the interest rate

If Bank A holds $200 in reserves, deposits are $1000, and the required reserve ratio is 15 percent, how much are excess reserves?

The inflation rate in Venezuela has increased between 2005 and 2010, rising from 14 percent per year to 31 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to -2.6 percent per year. The quantity theory of money

The quantity theory of money asserts that an increase in the quantity of money

University National Bank Balance Sheet -The above table has the balance of the University National Bank. All figures are in millions of dollars. The required reserve ratio is 20 percent. What is the value of excess reserves held by the University National Bank?

A $25,000 price tag on a new car is an example of money as

An increase in ________ decreases the quantity of money people want to hold.

The Federal Open Market Committee (FOMC) is composed of

The most powerful individual in the Federal Reserve is the Chairman of the Board of Governors.

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to

-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The required reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, what volume of loans will be made by MegaBank if the bank wants more profit and holds no excess reserves?

M2 is

Which of the following are part of a commercial bank's reserves? I. cash in the bank's vaults II. loans III. cash in checking accounts

Suppose the quantity of money is greater than the quantity of money demanded. In the short run, what occurs to set the quantity of money equal to the quantity of money demanded?

Money's function as a medium of exchange means that

________ real GDP increases the demand for money and ________ the nominal interest rate decreases the quantity of money demanded.

What is the equation of exchange? Suppose that real GDP and velocity are constant. In this case, what effect will an increase in the quantity of money have?