Exam 14: Money,banks,and the Federal Reserve System

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent.If the Federal Reserve reduces the required reserve ratio to 15 percent,then the bank will now have excess reserves of

The major shortcoming of a barter economy is

There is a strong link between changes in the money supply and inflation

If people speculate that a run on one bank will cause a run on all banks in the financial system,and this speculation proves accurate,then the financial system would experience what is known as a

If a person withdraws $500 from his/her checking account and holds it as currency,then M1 will ________ and M2 will ________.

Which of the following assets is most liquid?

Table 25-1 -Refer to Table 25-1.Suppose a transaction changes a bank's balance sheet as indicated in the T-account,and the required reserve ratio is 10 percent.As a result of the transaction,the bank has excess reserves of

Commodity money

The amount of national income in an economy equals the money supply in an economy.

If a person withdraws $500 from his/her savings account and puts it in his/her checking account,then M1 will ________ and M2 will ________.

Scenario 25-2 Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. -Refer to Scenario 25-2.As a result of Kristy's deposit,checking account deposits in the banking system as a whole (including the original deposit)could eventually increase up to a maximum of

The quantity equation states that the

The largest liability on the balance sheet of most banks is its

The quantity theory of money was derived from the quantity equation by asserting that

Suppose there is a bank panic.Which of the following would not be a consequence of this bank panic?

According to the U.S.Treasury,

Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent.If the Federal Reserve raises the required reserve ratio to 12 percent,then the bank will now have excess reserves of

According to the quantity theory of money,deflation will occur if the

The German Hyperinflation of the early 1920s was caused by

According to the quantity theory of money,if the money supply grows at 20 percent and real GDP grows at 5 percent,then the inflation rate will be