Money and Banking

What is the equation of exchange?

• 1/RR
• 1/MPS
• MV=PQ=GDP
• Excess=Actual-Required

In the Money Market graph, the 

• demand for money is perfectly elastic
• supply of money is perfectly inelastic
• the price axis is labeled real interest rate
• the supply curve is leaning

The Demand for Money is made up of

• M1
• Savings Bonds and Securities
• Real GDP
• Transactions Demand + Assets Demand

A bank can only lend out it's

• required reserves
• total checkable deposits
• excess reserves
• actual reserves

Kanye has $12,000 in cash and he deposits it in Kardashian National Bank.  How much does M1 change?

• $12,000 x the monetary multiplier
• $12,000
• it doesn't change, cash and checks are both M1
• $12,000 less the required reserves

Young Metro begins trusting banks and he deposits $10,000 in his.  The reserve requirement is 20%.  How much can his bank now lend out?

• $10,000
• $2,000
• $8,000
• $0

A commercial bank sells $10k in securities.  The reserve requirement is 10%.  How much of the money can the bank lend?

• $10,000
• $9,000
• $1,000
• $0

When the money supply increases, nominal interest rate will

• increase
• decrease
• remain the same
• shift left

Each of the following FED actions will contract the money supply except

• raise the reserve ratio
• raise the discount rate
• raise the Federal Funds rate
• buy bonds

Suppose that Captain Crunch bank has a customer deposit $5,000 and the bank's excess reserves go up by $4,000. The reserve ratio is

• 10%
• $1000
• 20%
• 40%