Exam 11: The Monetary System

Suppose the Federal Reserve increases bank reserves and banks lend out some of these reserves, but at some point banks still have $5 million more they wish to lend out. If the reserve requirement is 10 percent, how much more money can banks create if they lend out the remaining amount?

Which of the following is not included in M1?

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

An open-market purchase

In the nation of Wiknam, the money supply is $80,000 and reserves are $18,000. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

According to economists, "money" means the same thing as "wealth".

If an economy uses silver as money, then that economy's money

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

When you purchase school supplies at the book store using cash, you are using money as a medium of exchange.

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

In an economy that relies upon barter,

Money is the most liquid asset available because

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

A debit card is more similar to a credit card than to a check.

Fiat money

Which of the following is not a tool of monetary policy?

Which of the following is included in both M1 and M2?

Commodity money cannot be used as a unit of account.

Which of the following institutions is a central bank?