17.1 The Money Supply Model and the Money Multiplier
1)
Models describing the determination of the money supply and the Fed's role in this process normally focus on ________ rather than ________, since Fed actions have a more predictable effect on the former.
A)
rerves; the monetary ba
B)
rerves; high-powered money
C)
the monetary ba; high-powered money
D)
the monetary ba; rerves
Answer:
D
Ques Status: Previous Edition
2)
The Fed can exert more preci control over ________ than it can over ________.
A)
high-powered money; rerves
B)
high-powered money; the monetary ba
C)
the monetary ba; high-powered money
D)
rerves; 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 ba is called the
A)
money multiplier.
B)
required rerve ratio.
C)
deposit ratio.
D)
discount rate.
Answer:
A
Ques Status: Previous Edition
4)
The formula linking the money supply to the monetary ba 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 ba is the
A)
currency-checkable deposits ratio.
B)
required rerve ratio.
C)
money multiplier.
D)
nonborrowed ba.
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 rerves
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 rerves in the banking system is equal to the ________ required rerves and excess rerves.
A)
sum of
B)
difference between
C)
product of
D)
ratio between
Answer:
A
Ques Status: New
8)
The total amount of required rerves in the banking system is equal to the ________ the required rerve 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 Rerve ts the required rerve ratio to less than one, one dollar of rerves 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 ba needed to support existing levels of checkable deposits, excess rerves, and currency is
A)
MB = (r × D) + ER + C.
B)
MB = (r + D) + ER + C.
C)
MB = + ER + C.
D)
MB = (r × D) - ER - C.
Answer:
A
Ques Status: Revid
11)
An increa in the monetary ba that goes into ________ is not multiplied, while an increa that goes into ________ is multiplied.
A)
deposits; currency
B)
excess rerves; currency
C)
currency; excess rerves
D)
currency; deposits
Answer:
D
Ques Status: Revid
12)
An increa in the monetary ba that goes into currency is ________, while an increa that goes into deposits is ________.
A)
multiplied; multiplied
B)
not multiplied; multiplied
C)
multiplied; not multiplied
D)
not multiplied; not multiplied
Answer:
B
Ques Status: Revid
13)
If the Fed injects rerves into the banking system and they are held as excess rerves, then the money supply
A)
increas by only the initial increa in rerves.
B)
increas by only one-half the initial increa in rerves.
C)
increas by a multiple of the initial increa in rerves.
D)
does not change.
Answer:
D
Ques Status: Previous Edition
14)
If the Fed injects rerves into the banking system and they are held as excess rerves, then the monetary ba ________ and the money supply ________.
A)
remains unchanged; remains unchanged
B)
remains unchanged; increas
C)
increas; increas
D)
increas; remains unchanged
Answer:
D
Ques Status: Previous Edition
15)
The formula that links checkable deposits to the monetary ba is
A)
m =.
B)
M =.
C)
M = .
D)
D =.
E)
D = × MB.
Answer:
E
Ques Status: Revid
16)
The formula that links checkable deposits to the money supply is
A)
M = .
B)
