Unit 5: The Financial Sector

What is the main purpose of a legal reserve requirement

Reserves in a commercial bank include

In terms of volume or dollar amount, most $ in the US economy is created by

Reserves-$27,000 Demand Deposits-$110,000 RR-20%. What is the excess reserves

The money functions are

What will happen to real interest rates and real outputs if the money supply increases

When a commercial bank borrows from a Federal reserve bank

The money supply is currently backed

T/F tight money will cause $ to appreciate and decrease US net exports

T/F open-market operations involve buying and selling gov bonds/securities by the Fed

Which of these is a tool(s) of monetary policy

Identify this graph

Bank ABC has an ER of $4,000 and Demand Deposits of $80,000. RR-25%. Reserve Size is

T/F the federal funds market is where banks borrow reserves from one another on overnight basis

The amount a commercial bank can lend is determined by

Which of these is true about the Federal reserve?

T/F, easy money policy will ↓ the foreign demand for the US $

Which of these groups is responsible for monetary policy in the US

The multiple banks can expand the supply of money is equal to the reciprocal of

Fiat money is

Under which condition should you use contractionary (tight money) monetary policy

T/F, in the short term money supply ↑ will briefly create money surplus and ↓ interest rate

Which of these would increase the money supply

The Fed sells $500,000 in government securities. If banks have no ER and RR is 20%. $ supply

What is the purpose of tight money policy

T/F checking accounts are also known as demand deposits

In the United States M1 is comprised all of these except

Identify this graph

When we say money is a medium of exchange, we mean it is

Banks create money when they