Exam 11: The Monetary System

Given the following information, what are the values of M1 and M2? Small time deposits $600 billion Demand deposits and other checkable deposits $400 billion Savings deposits $800 billion Money market mutual funds $700 billion Traveler's checks $30 billion Large time deposits $400 billion Currency $250 billion Miscellaneous categories in M2 $20 billion

The discount rate is the rate the Federal Reserve charges banks for loans. By lowering this rate, the Fed provides banks with a greater incentive to borrow from it.

Which of the following is not included in M1?

When the Federal Reserve conducts open-market operations to increase the money supply, it

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 the Bank of Tazi purchased 50 million tazes of Tazian Treasury Bonds from the banks. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much does the money supply change?

The agency responsible for regulating the U.S. monetary system is the

What is bank insolvancy?

Which of the following is a store of value?

A bank's reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to

The president of each regional Federal Reserve Bank is appointed by

Economists argue that the move from barter to money increased trade and production. How is this possible?

In a fractional-reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 million worth of bonds,

If the reserve requirement is 10 percent, which of the following pairs of changes would both allow a bank to lend out an additional $10,000?

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

To increase the money supply, the Fed could

Table 29-6. -Refer to Table 29-6. The Bank of Pleasantville's reserve ratio is

As the reserve ratio decreases, the money multiplier

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

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

During the Great Depression in the early 1930s,