Exam 8: Money, the Price Level, and Inflation

When the Fed buys securities from a bank, what happens to the monetary base and the quantity of money? Which changes by more or do both change by the same amount?

A depository institution creates liquidity and pools risk.

A change in the price level changes the amount of nominal money people demand.

An argument in favor of fractional-reserve banking is that

Sarah buys shares from a financial institution that uses her funds together with other funds to purchase U.S. treasury bills. Sarah has deposited her money into a

An increase in the currency drain

In October of 2015, the nominal interest rate earned on money market accounts was around 0.20 percent. This interest rate is a measure of which of the following?

-In the above figure, suppose the economy is initially on the demand for money curve MD₁. What is the effect of a rise in the nominal interest rate?

When the quantity of money demanded is greater than the quantity of money supplied, people ________ bonds and the interest rate ________.

-The above table gives the initial balance sheet for Mega Bank. Mega Bank's desired reserves equal its required reserves. Based on the initial balance sheet, what is the required reserve ratio for Mega Bank?

In the short run, when the Fed decreases the quantity of money

The direct exchange of goods and services for other goods and services is known as

Liquidity is the

-The above table gives the initial balance sheet for Mini Bank. If the bank's desired reserve ratio is 10 percent, it will make

Suppose that the nominal quantity of money is $200 billion and the value of nominal GDP is $1 trillion. It must be the case that

Suppose that nominal interest rates double. As a result, the quantity of money doubles as well.

In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

The minimum percentage of deposits that a depository institution must hold and cannot use for lending is known as the

Checks that people write are

The monetary base is the sum of