Exam 4: The Monetary System: What It Is and How It Works

If many banks fail, this is likely to:

If the monetary base is denoted by B, rr is the ratio of reserves to deposits, and cr is the ratio of currency to deposits, then the money supply is equal to ______ divided by ______ multiplied by B.

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the monetary base equals:

If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:

To make a trade in a barter economy requires:

In prisoner of war camps during World War II, the "currency" used was:

Quantitative easing is most closely akin to:

The quantity of money in the United States is essentially controlled by the:

How much effect do the purchase and sale of bonds through open-market operations have on the money supply?

The interest rate charged on loans by the Federal Reserve to banks is called the:

How do credit card transactions affect the measurement of money?

A country that is on a gold standard primarily uses:

The central bank in the United States is the:

In a 100-percent-reserve banking system, if a customer deposits $100 of currency into a bank, then the money supply:

Currency equals:

In the United States, monetary policy is controlled by:

Economists use the term money to refer to:

The use of fei as money on the island of Yap illustrates the idea of money as a social convention because:

The development of fiat money is quite perplexing, as people began to value something that is intrinsically useless. Explain why fiat money came into use.

Construct a bank balance sheet with the following items: reserves, deposits, loans, securities, capital, and debt. Choose values so that the reserve-deposit ratio is 10 percent and the leverage ratio is 10. Give an example of a change in asset values that would push bank capital to zero. What happens when bank capital is gone?