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Chapter_16_17_study_questions - 2 The relationship between...

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CHAPTER 16-17 STUDY QUESTIONS Chapter 16 1. Fractional reserve banking 2. Reserve requirement 3. Legal reserves consist of…. 4. Excess reserves are equal to… 5. Know how to calculate required reserves and excess reserves 6. Bank use excess reserves for…. 7. What happens to the money supply when a check written on one bank is deposited into another bank? 8. What happens to the money supply when the required reserve ratio is raised/lowered? 9. Maximum money multiplier 10. What happens to the reserves in the banking system when the Fed buys bonds/Fed sells bonds? 11. FOMC has responsibility for… 12. A few math questions involving the money multiplier. 13. What will reduce the money multiplier? 14. Discount rate/ federal funds rate- know the definition. 15. Federal funds market- what is it. 16. FDIC 17. The primary tool of the Fed is… Chapter 17 1. The three reasons for holding money are; know by definition.
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Unformatted text preview: 2. The relationship between national income and the transaction demand for money. 3. The demand for money function 4. Precautionary and asset demand for money are determined by… 5. The relationship between bond prices and interest rates. 6. Find the interest rate on a bond . 7. Excess money demand will lead to… 8. An excess supply of money will… 9. If the Fed sell bonds in the open market what happens to the supply of bonds and the price of bonds? 10. To close a recessionary gap the Fed would… 11. The Fed would be pursuing a contractionary monetary policy if it were… 12. The direct effect of an increase the money supply is to… 13. An appreciation of the dollar is usually a sign that… 14. Equation of exchange 15. Qty. theory of money 16. Monetarists maintain that the Fed should… 17. The Keynesian analysis and monetary policy....
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