Exam 11: The Monetary System

Table 11-5. -Refer to Table 11-5. Assume the Fed's reserve requirement is 9 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 9 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

The manager of the bank where you work tells you that your bank has $10 million in excess reserves. She also tells you that the bank has $400 million in deposits and $355 million dollars in loans. Given this information you find that the reserve requirement must be

Table 11-5. -Refer to Table 11-5. The Bank of Pleasantville's reserve ratio is

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

The manager of the bank where you work tells you that your bank has $5 million in excess reserves. She also tells you that the bank has $300 million in deposits and $255 million dollars in loans. Given this information you find that the reserve requirement must be

If the Fed buys bonds in the open market, the money supply decreases.

In a fractional-reserve banking system, a bank

Refer to Value Values of Assets -Refer to Value of Assets. What is the value of M1 in billions of dollars?

If the reserve ratio is 5 percent, then $1,000 of additional reserves can create up to

Sandra routinely uses currency to purchase her groceries. She is using money as a medium of exchange.

When the Fed purchases $200 worth of government bonds from the public, the U.S. money supply eventually increases by

The Fed can decrease the money supply by conducting open-market

The money multiplier equals

Table 11-4. -Refer to Table 11-4. If the bank faces a reserve requirement of 10 percent, then the bank

Scenario 11-2. The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. -Refer to Scenario 11-2. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assuming that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after the change in the reserve requirement?

During the Great Depression in the early 1930s,

Other things the same, if reserve requirements are increased, the reserve ratio

You use U.S. currency to pay the owner of a restaurant for a delicious meal. The currency

The legal tender requirement means that

What is the difference between money and wealth?