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Use the following table to determine the levels of M1 and M2 in the United States.
Money Categories in the United States
Asset Amount (billions of dollars)
Currency $82
Demand deposits 80
Money market funds 44
Other checkable deposits 37
Savings deposits 460
Small time deposits 22
Traveler’s checks 4
The part of the Federal Reserve that determines and implements the nation’s monetary policy and controls the money supply to promote stable prices and economic growth is the:
a. Sam gives the grocery store clerk a $5 bill to pay for his purchase.
b. Bill looks at the $20 price tag on a clock to see how much money he would need to purchase it.
c. Maria writes a check to pay her electric bill.
d. Susan transfers some of her wealth from her checking account into a certificate of deposit that earns interest.
•
The Federal Reserve District Banks are divided:
The M1 measure of money consists of the sum of
The Federal Reserve System consists of which of the following?
•
Federal Deposit Insurance Corporation and Controller of the Currency
Other things being equal, an expansion of commercial bank lending
•
changes the composition, but not the size, of the money supply.
The reason for the Fed being set up as an independent agency of government is to
When a consumer wants to compare the price of one product with another, money is primarily functioning as a
If the reserve requirement is 20% and commercial bankers decide to hold additional excess reserves equal to 5% of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be
If you put a $20 bill in the pocket of your winter coat at the beginning of spring so that you will be surprised when you find it again next winter, you are using money as
Which definition(s) of the money supply include(s) only items that are directly and immediately usable as a medium of exchange?
Money is “created” when
The equilibrium rate of interest in the market for money is determined by the intersection of the
The Federal Open Market Committee (FOMC)
The required-reserve ratio is equal to a commercial bank’s
The coupon rate is the
Money eliminates the need for a coincidence of wants in trading primarily through its role as a
One hundred percent reserve banking refers to a situation in which banks’ reserves equal One hundred percent of their
Fractional reserve banking refers to a system where banks
The functions of money are to serve as a
A bank’s net worth is equal to its
What function is money serving when you deposit it in a savings account?
A wealthy executive is holding money, waiting for a good time to invest in the stock market. This action would be an example of the
If product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as
Which group is responsible for the policy decision of changing the money supply?
Cash held by a bank in its vault is a part of the bank’s
Assume that the required reserve ratio is 20%. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the reserves at Bank A and Bank B?
