Terms in this set (18)
R / D
Assets / Capital
Major functions of money
medium of exchange, unit of account, store of value
Assets included in M1:
demand deposits, travelers checks, currency.
Bank reserves equal:
deposits that banks have received but have not lent out.
Banks create money in:
a fractional reserve banking system but not in a 100 percent reserve banking system.
the sum of coins and paper money.
Demand deposits are funds held in:
If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:
the money supply decreases.
In a 100-percent-reserve banking system, if a customer deposits $100 of currency into a bank, then the money supply:
remains the same.
Liabilities of banks include:
In the US, monetary policy is controlled by:
the Federal Reserve
Open market operations change the ____; changes in interest rate paid on reserves change the ____; and changes in the discount rate change the ____.
monetary base; money multiplier; monetary base.
Payment is deferred by using ____, but immediate access to funds occurs when using ____.
credit cards; debit cards
The reserve-deposit ratio is determined by:
business policies of banks and the laws regulating banks.
To increase the monetary base, the Fed can:
conduct open market purchases.
When the Fed increases the discount rate, it:
is likely to decrease the Monetary Base (B)
When the Fed increases the interest rate paid on reserves, it:
increases the reserve-deposit ratio (rr)