Explain what will happen to the money multiplier process if there is an increase in the reserve requirement?

What are the four functions served by money?

What are reserve requirements? What happens to the money supply when the Fed raises reserve requirements?

What do you think the Federal Reserve Bank did to the reserve requirement during the Great Recession of 2008–2009?

Which of the following Fed actions would both decrease the money supply?

A. Buy bonds and raise the reserve requirement

B. Buy bonds and lower the reserve requirement

C. Sell bonds and raise the reserve requirement

D. Sell bonds and lower the reserve requirement

Assume that the reserve requirement is 5 percent. All other things being equal, will the money supply expand more if the Fed buys $2,000 worth of bonds or if someone deposits in a bank$2,000 that she had been hiding in her cookie jar? If one creates more, how much more does it create? Support your thinking.

What is the asset-liability time mismatch that all banks face?

Use the formula below to estimate the total change in the money supply. Change in money supply = 1/Reserve Requirement $\times$ Change in reserves at first bank. What is the change in the money supply for an initial deposit of $1,000 if the reserve requirement is 5 percent (.05)?

Explain why you think the Federal Reserve Bank tracks M1 and M2.

The total amount of U.S. currency in circulation divided by the U.S. population comes out to about $3,500 per person. That is more than most of us carry. Where is all the cash?

The sale of government bonds by the Federal Reserve Banks to commercial banks will _____.

A. Increase aggregate supply.

B. Decrease aggregate supply.

C. Increase aggregate demand.

D. Decrease aggregate demand.

Explain how banks create money.

What is the double-coincidence of wants?

Why is a bank called a financial intermediary?