tb_chap14 - Chapter14 DeterminantsoftheMoneySupply 14.1

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Chapter 14 Determinants of the Money Supply 14.1 The Money Supply Model and the Money Multiplier 1) Models describing the determination of the money supply and the Fed ʹ s role in this process normally focus on ________ rather than ________, since Fed actions have a more predictable effect on the former. A) reserves; the monetary base B) reserves; high - powered money C) the monetary base; high - powered money D) the monetary base; reserves Answer: D Ques Status: Previous Edition 2) The Fed can exert more precise control over ________ than it can over ________. A) high - powered money; reserves B) high - powered money; the monetary base C) the monetary base; high - powered money D) reserves; high - powered money Answer: A Ques Status: Previous Edition 3) The ratio that relates the change in the money supply to a given change in the monetary base is called the A) money multiplier. B) required reserve ratio. C) deposit ratio. D) discount rate. Answer: A Ques Status: Previous Edition
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Chapter 14 Determinants of the Money Supply 351 4) The formula linking the money supply to the monetary base is A) M = m/MB. B) M = m × MB. C) m = M × MB. D) MB = M × m. E) M = m + MB. Answer: B Ques Status: Previous Edition 5) The variable that reflects the effect on the money supply of changes in factors other than the monetary base is the A) currency - checkable deposits ratio. B) required reserve ratio. C) money multiplier. D) nonborrowed base. Answer: C Ques Status: Previous Edition 6) An assumption in the model of the money supply process is that the desired levels of currency and excess reserves A) are given as constants. B) grow proportionally with checkable deposits. C) grow proportionally with high - powered money. D) grow proportionally over time. Answer: B Ques Status: New 7) The total amount of reserves in the banking system is equal to the ________ required reserves and excess reserves. A) sum of B) difference between C) product of D) ratio between Answer: A Ques Status: New
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352 Mishkin · Economics of Money, Banking, and Financial Markets , Eighth Edition 8) The total amount of required reserves in the banking system is equal to the ________ the required reserve ratio and checkable deposits. A) sum of B) difference between C) product of D) ratio between Answer: C Ques Status: New 9) Since the Federal Reserve sets the required reserve ratio to less than one, one dollar of reserves can support ________ of checkable deposits. A) exactly one dollar B) less than one dollar C) more than one dollar D) exactly twice the amount Answer: C Ques Status: New 10) The equation that shows the amount of the monetary base needed to support existing levels of checkable deposits, excess reserves, and currency is A) MB = (r × D) + ER + C. B) MB
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This note was uploaded on 03/23/2011 for the course ECON 301 taught by Professor Hassan during the Spring '08 term at Rutgers.

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tb_chap14 - Chapter14 DeterminantsoftheMoneySupply 14.1

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