Graded Homework 14 – Flashcards

Among the assets of a bank are

Included in M1 are:

Suppose your grandma sends you $100 for your birthday and you deposit it in your checking account. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____.

First National Bank has $80 million in checkable deposits, $15 million in deposits with the Federal Reserve, $5 million cash in the bank vault, and $5 million in government bonds.

The U.S. dollar is defined as:

Loans of reserves from one bank to another are made in the _____ market.

Suppose a bank gets a new deposit of $100 cash and it has a 20% required reserve ratio. If the bank lends the maximum amount of money allowed, then the checkable deposits (including the original deposit) increase by:

If the Fed conducts an open-market sale, bank reserves _____ and the money supply is likely to _____.

Scenario: Money Supply Changes The reserve requirement is 10% and Jack withdraws $5,000 travel money from his checkable deposit. Assume that banks do not hold any excess reserves and that the public holds no currency, only checkable bank deposits. (Scenario: Money Supply Changes) Look at the scenario Money Supply Changes. As a result of the withdrawal, excess reserves _____ by _____.

If the required reserve ratio is 10% and the Fed conducts an open market purchase of $100, what is the maximum possible change in the money supply?

Holding everything else constant, if the required reserve ratio falls:

"Tuition at State University this year is $8,000." Which function of money does this statement best illustrate?

Which of the following assets is the MOST liquid?

Which of the following is a function of the Federal Reserve System? I. conducting fiscal policy II. examining and supervising commercial banks in the Fed regions III. evaluating corporate mergers

When a bank deposit is withdrawn and kept as currency, bank reserves decrease and the:

Suppose the Federal Reserve buys $50 million in Treasury bills from commercial banks. If the reserve ratio is 10%, the monetary supply might eventually _____ by _____.

Capital requirements for banks serve all of the following purposes EXCEPT:

Bank runs in the United States during the 1930s damaged the economy because:

To _____ the money supply, the Federal Reserve could _____.