ECO102H1 Chapter Notes - Chapter 21: Real Interest Rate, Consumption Function, Disposable And Discretionary Income

its action has no effect on the total reserves or the money supply because the check it writes increases reserves at one bank but they fall at another.

its action expands total reserves and the money supply.

its action contracts total reserves and the money supply.

total reserves increase by the amount of the purchase but the money supply stays the same.

reserves increase, leading to a decrease in the money supply by an amount more than the sale of the government securities.

reserves decrease, leading to a decrease in the money supply by an amount more than the sale of the government securities.

reserves increase, leading to a increase in the money supply by an amount more than the sale of the government securities.

reserves decrease, leading to a increase in the money supply by an amount more than the sale of the government securities.

the reserve ratio.

one minus the reserve ratio

the inverse of the required reserve ratio.

the number of dollars on reserve.

the growth in the money supply when income increases.

the growth in real national income when the money supply increases.

the maximum potential change in the money supply due to a change in income.

the maximum potential change in the money supply due to a change in reserves.

increases the money multiplier.

will cause banks to make more loans.

has an expansionary effect on the money supply.

has a contractionary effect on the money supply.

banks against lawsuits.

the deposits held in member banks.

the deposits held in the Fed.

the federal funds market.

in difficult times people want currency instead of demand deposits.

the FDIC is inefficient.

banks do not keep enough reserves to cover all their depository liabilities.

bankers are often poor businesspeople.

make riskier loans than they otherwise would.

reject some loans that probably would be profitable.

maintain excess reserves that are too great.

be too conservative in their lending practices.

discourages banks from engaging in excessive risk taking.

was established after the Panic of 1907.

only insures deposits in money-center banks.

increases the stability of the banking system by reducing the likelihood of bank runs.

Money is government issued and it is redeemable for gold or silver.

Money is part of every barter transaction and it is divisible.

Money is accepted as a medium of exchange and it is the common unit of account used to express prices.

Money is a common unit of account and it is also can be traded for other currencies at a guaranteed exchange rate.

asset demand.

precautionary demand.

aggregate demand.

transactions demand.

the transaction demand for money.

the spending demand for money.

the asset demand for money.

the precautionary demand for money.

decreases.

increases.

decreases initially and then increases to the original position.

does not change.

increases, and the money demand curve shifts to the right.

remains constant, and the money demand curve remains the same.

decreases, and the money demand curve shifts to the left.

increases, and the money demand curve shifts to the left.

it fulfills no precautionary role.

it fulfills no transactions role.

it earns no interest income.

its real value always increases.