Quizz 205 lec 6

When the Fed decreases the discount rate, banks will

• borrow more from the Fed and lend more to the public. The money supply increases

• borrow more from the Fed and lend less to the public. The money supply decreases

• borrow less from the Fed and lend more to the public. The money supply increases

• borrow less from the Fed and lend less to the public. The money supply decreases.

Credit cards

• are included in M1 but not M2.

• are included in M1 and M2.

• are included in M2 but not M1

• are not included in any measure of the money supply

Other things the same, if reserve requirements are increased, the reserve

ratio

• increases, the money multiplier increases, and the money supply increases.

• increases, the money multiplier decreases, and the money supply decreases.

• decreases, the money multiplier increases, and the money supply increases.

• decreases, the money multiplier decreases, and the money supply increases

Which of the following lists two things that both increase the money supply?

• the Fed buys bonds and raises the discount rate

• the Fed buys bonds and lowers the discount rate

• the Fed sells bonds and lowers the discount rate

• the Fed sells bonds and raises the discount rate

Liquidity refers to

• a measurement of the intrinsic value of commodity money.

• the suitability of an asset to serve as a store of value.

• how many time a dollar circulates in a given year.

• the ease with which an asset is converted to the medium of exchange.

Which of the following lists ranks types of assets from most liquid to least

liquid?

• currency, demand deposits, money market mutual funds

• currency, money market mutual funds, demand deposits

• money market mutual funds, demand deposits, currency

• demand deposits, money market mutual funds, currency