Exam 11: The Monetary System

The set of items that serve as media of exchange clearly includes

For purposes of analyzing the money stock and its relationship to relevant economic variables, money is best thought of as

On a bank's T-account, which are part of the banks liabilities?

Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?

Assume that when $100 of new reserves enter the banking system, the money supply ultimately increases by $625. Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits. If, at a point in time, reserves for all banks amount to $500, then at that same point in time, loans for all banks amount to $2,625.

What does the "double coincidence of wants" refer to?

Money allows people to specialize in what they do best, thereby raising everyone's standard of living.

In the U.S., the average adult holds about $4,490 in

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

Scenario 29-2. 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 29-2. 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?

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

A bank has a 10 percent reserve requirement, $36,000 in loans, and has loaned out all it can given the reserve requirement.

Consider five individuals with different occupations. If this economy has money

Credit card limits are included in

Consider four survivors on an island. Which of the following pairs of survivors has a double-coincidence of wants?

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

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

Assume that when $100 of new reserves enter the banking system, the money supply ultimately increases by $800. Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits. If, at a point in time, reserves for all banks amount to $750, then at that same point in time, loans for all banks amount to $6,000.

At any meeting of the Federal Open Market Committee, that committee's voting members consist of

Explain how each of the following changes the money supply. a. the Fed buys bonds b. the Fed auctions credit c. the Fed raises the discount rate d. the Fed raises the reserve requirement