Easy Money/Tight Money Monetary Policy

The fact that money "enables people to transfer purchasing power from the present to the future" refers to the ______ function of money.

• unit of value

• store of value

• unit of account

• medium of exchange

Which component would NOT be included in the definition of money?

• Medium of Exchange

• Unit of Value

• Store of Value

• Unit of Account

Suppose the required reserve ratio is 10% and the Indianapolis State Bank initially has no need of excess reserves. If a construction company deposits $200,000 in the bank, how much of this deposit could the Indianapolis State Bank loan out?

• $10,000

• $20,000

• $180,000

• $200,000

Which of these would deter inflation?

• a decrease in interest rates

• an increase in economic growth

• an increase in consumer spending

• a decrease in the price of securities

Which statement does NOT describe a responsibility of the Reserve Banks?

• They lend to depository institutions. (other banks)

• They supervise and examine state member banks.

• They provide banking services, such as accounts, to individuals.

• They provide key financial services such as distributing the nation's currency.

Suppose the Federal Reserve sells $25 billion worth of government securities. If the required reserve ratio is 10%, the maximum decrease in the money supply is ____.

• $2.5 billion

• $25 billion

• $50 billion

• $250 billion