Homework 6 example #76461

When a person makes price comparisons among products, money is being used as a(n)

A bank is _______ when its _______ become(s) _______ .

Which of the following is an example of a bank's liabilities?

One disadvantage of commodity money is that

The federal funds rate is the interest rate the Fed charges to banks when it lends reserves to them.

Which of the following describes the medium-of-exchange function of money?

When the price of a bond rises, the interest rate paid on the bond also rises.

Sketch Money Demand and Supply curves and label the equilibrium interest rate. If the interest rate is above the equilibrium rate, there will be

Which of the following is NOT an advantage of using money as a medium of exchange?

A financial institution that accepts deposits, makes loans, and offers checking accounts is

The functions of money are

When a bank receives new deposits, it can make new loans up to the amount of

The monetary aggregate, M1, increases when

The demand for money curve is negatively sloped because people tend to hold less money at lower interest rates.

If bond prices rise,

A bank's reserves are

A bond is

Which of the following best illustrates the unit of account function of money?

Money is any item that is widely used and freely accepted as payment for goods and services.

The ease with which an asset can be converted to money is its

Higher interest rates tend to increase the demand for money.

Between the early 1970s and the mid-2000s, banks' share of the U.S. credit market financial assets

A bank that has no excess reserves

Credit cards are

Suppose the required reserve ratio is 10%. If a bank has total reserves of $80,000 and checkable deposits of $550,000, what is the amount of the bank's required reserves?

When banks hold more reserves than are required, such reserves are called

Currency in the United States today is

What is meant by leverage?

As a result of an increase in the money supply, the aggregate demand will shift to the left.

What happens in the money market when there is an increase in the supply of money?

Separation of commercial and investment banking was accomplished in the great depression by which law?

The discount rate is the rate of interest charged when banks lend excess reserves to one another.

The principle of fractional reserve banking makes it possible for a

What happens when you withdraw cash from a bank?

The demand curve for money shows the quantity of money demanded at each interest rate, all other things unchanged.

The required reserve ratio is 10%. What is the value of the deposit multiplier?

An increase in the money supply will lower the equilibrium rate of interest.

An increase in the money supply tends to reduce investment.

The Federal Depository Insurance Corporation (FDIC) has the power to close a bank when

Which of the following is an example of a bank's assets?

The financial system's role in the economic system is to

Which of the following is included in M2 but not in M1?

Money is any item that

All else constant, a decrease in the supply of money will lead to

Gresham's Law

Commodity money is paper currency that may be redeemed for a specific commodity at a specified rate on the currency.

An institution that collects funds from lenders and distributes these funds to borrowers is called

Which of the following is not an example of a financial intermediary?

Rank the following items in terms of most liquid to least liquid.

Suppose the Fed increases reserves. We can expect this transaction to

The opportunity cost of holding money is

Fiat money is money that has a value apart from its use as money.

Which of the following describes the store of value function of money?

Which of the following decreases the demand for money?

Which of the following is NOT part of M1?

If the reserve ratio is 10%, and banks do not hold excess reserves, a $10 million in reserves would increase the money supply by at most