ECO 1000 Lecture Notes - Lecture 82: Open Market Operation, Commercial Bank, Excess Reserves
Document Summary
The value (purchasing power) of each unit of money is inversely related to prices (in other words, money"s value falls as prices rise and vice versa). Second national bank confronts a reserve requirement of 20 percent and currently holds millions of dollars in excess reserves. If a depositor withdraws ,000, the excess reserves of the bank will decline by ,000. Which of the following actions of the fed would increase the money supply? all of the above are correct. Which of the following compose the reserves of a commercial bank? vault cash and deposits of the bank with the federal reserve. Reserves that banks are required by law to keep on hand to back up their deposits are called: required reserves. A reserve requirement of 20 percent implies a potential money deposit multiplier of: chap 13. The fed increased both its purchase of assets and quantity of loans extended.
