Macro Chapter 4

Money's liquidity

To make a trade in a barter economy requires

Money that has no value other than as money is called ? money

A country that is on a gold standard primarily uses

An important factor in the evolution of commodity money to fiat money is:

In a country on a gold standard, the quantity of money is determined by the:

To increase the money supply, the Federal Reserve:

To reduce the money supply, the Federal Reserve:

Open market operations are:

Currency equals:

Demand deposits are funds held in:

In a system with 100 percent reserve banking:

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

In a 100 percent reserve banking system, banks:

In a system with fractional reserve banking

In a fractional reserve banking system, banks create money when they:

In a fractional reserve banking system, banks create money because:

What is the value of bank capital?

The minimum amount of owners' equity in a bank mandated by regulators is called a ? requirement.

The use of borrowed funds to supplement existing funds for purposes of investment is called:

(Table: Bank Balance Sheet) Based on the table, what is the leverage ratio at the bank?

(Table: Bank Balance Sheet) Based on the table, what is the reserve/deposit ratio at the bank?

(Table: Bank Balance Sheet) Based on the table, owners' equity will fall to zero if loan defaults reduce the value of total assets by percent.

The amount of capital that banks are required to hold depends on the:

The monetary base consists of:

The size of monetary base is determined by:

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

The reserve deposit ratio is determined by:

The currency deposit ratio is determined by

The preferences of households determine the:

The ratio of the money supply to the monetary base is called:

High powered money is another name for:

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:

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

The money supply will increase if the:

The money supply will decrease if the:

If the reserve-deposit ratio is less than one, and the monetary base increases by $1 million, then the money supply will:

If the currency-deposit ratio equals 0.5 and the reserve-deposit ratio equals 0.1, then the money multiplier equals:

If the monetary base equals $400 billion and the money multiplier equals 2, then the money supply equals:

When the Fed makes an open

If you hear in the news that the Federal Reserve conducted open market purchases, then you should expect ? to increase.

When the Federal Reserve conducts an open market purchase, it buys bonds from the:

When the Fed decreases the interest rate paid on reserves, it:

When the Fed decreases the interest rate paid on reserves, if the ratio of currency to deposits decreases also while the monetary base is constant, then:

When the Fed increases the discount rate, it:

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

When the Fed increases the interest rate paid on reserves, it:

If the Federal Reserve wishes to increase the money supply, it should:

The most frequently used tool of monetary policy is:

To increase the monetary base, the Fed can:

To increase the money multiplier, the Fed can:

If the Federal Reserve increases the interest rate paid on reserves, banks will tend to hold ? excess reserves, which will ? the money multiplier.

Excess reserves are reserves that banks keep:

Compared to typical open market operations, when pursuing quantitative easing, Federal Reserve purchases tended to be ? securities.

To prevent banks from using excess reserves to make loans that would increase the money supply, the Federal Reserve could conduct open market ? and ? the interest rate paid on bank reserves.