quiz 14 Flashcards
(42 cards)
Q1:
The government agency that oversees the banking system and is responsible for the conduct of monetary policy in the United States is ________.
the Federal Reserve System
Q2:
The three players in the money supply process include ________.
A2:
banks, depositors, and the central bank
Q3:
Both ________ and ________ are Federal Reserve assets.
A3:
securities; loans to financial institutions
Q4:
The monetary liabilities of the Federal Reserve include ________.
A4:
currency in circulation and reserves
Q5:
The monetary base consists of ________.
currency in circulation and reserves
Reserves are equal to the sum of ________.
equired reserves and excess reserves
The interest rate the Fed charges banks borrowing from the Fed is the ________.
discount rate
Purchases and sales of government securities by the Federal Reserve are called ________.
open market operations
Total Reserves minus vault cash equals ________.
bank deposits with the Fed
The amount of deposits that banks must hold in reserve is called ________.
required reserves
When the Federal Reserve purchases a government bond from a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant.
increase; increases
When the Fed sells $100 worth of bonds to a primary dealer, reserves in the banking system ________.
decrease by $100
In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves, the bank can now increase its loans by ________.
100
When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system ________.
increase by $100
There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.
purchase; extend
If the Fed decides to reduce bank reserves, it can ________.
sell government bonds
In the simple deposit expansion model, if the Fed extends a $100 discount loan to a bank that previously had no excess reserves, the bank can now increase its loans by ________.
100
If reserves in the banking system increase by $100, then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is ________.
0.20
If the required reserve ratio is 10 percent, the simple deposit multiplier is ________.
10.0
Q21:
In the simple deposit expansion model, an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed ________.
purchased $100 in government bonds
In the simple deposit expansion model, if the banking system has excess reserves of $75, and the required reserve ratio is 20%, the potential expansion of checkable deposits is ________.
$375
If reserves in the banking system increase by $100, then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is ________.
0.05
If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of ________.
22,000
A bank has excess reserves of $6,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank’s excess reserves will be ________.
1,000
