Balance Sheets
Ample Reserves :)
Limited Reserves :(
Graphs
I'm Feeling Lucky
100
If Fred deposited $1000 in this commercial bank, what would the immediate change in total bank reserves be?
Increase $1000
($100 required and $900 excess)
100
Define interest on reserves
The interest that the central banks pays to commercial banks that deposit their reserves with the central bank
100
If the Fed purchases treasury securities on the open market, what will the effect on the money supply be?
Money supply increases
100
As depicted in the image, what is the major change that has happened to US monetary policy since 2008?
Reserves became ample
100
What type of monetary policy is designed to reduce aggregate demand and correct inflation?
Contractionary
200
The central bank purchases $1000 of bonds from this commercial bank. What is the immediate change to the amount of required and excess reserves held by the commercial bank?
Required reserves- no change
Excess reserves- increase $1000
200
The market is crashing. How will the central bank adjust administered rates?
Reduce administered rates
200
The central bank of Kyrgyzstan increased the reserve requirement for their country's commercial banks from 9.5% to 15% between 2015 and 2024. What effect would this have had on the money supply of the Kyrgyzstani Som?
Money supply decreases
200
The Federal reserve implements the policy decision depicted in the graph below. What macroeconomic change are they likely trying to effect with this decision? 
Reduce inflation
200
The nominal interest rate is 5% and the real interest rate is 2%. What is the rate of inflation?
3%
300
What is the reserve requirement?
10%
300
Will the Federal Funds rate typically be greater than or less than the interest on reserves and the discount rate?
>="interest on reserves"
<="discount rate"
300
The central bank (the Fed) buys bonds on the open market. What are the effects (increase or decrease) on:
- the supply of money
- the federal funds rate
- the amount of loans taken out
- aggregate demand
- prices
- output
- the supply of money UP
- the federal funds rate DOWN
- the amount of loans taken out UP
- aggregate demand UP
- prices UP
- output UP
300
At the supply of reserves depicted, does this country have limited or ample reserves?
Ample
300
What is one possible reason that the supply of loanable funds might decrease?
Decrease in private savings
Decrease in government savings
Net capital outflow
400
If Carlos withdraws $5000 cash from his checking account at Mi Tierra Bank, what is the immediate change to the M1 and M2 money supply?
No change to either
400
The Fed decides to sell bonds. What will happen to the price of bonds and their interest rate?
Price decreases
Interest rate increases
400
The Fed believes that the USA is falling into a recession. What changes will it make to the discount rate and reserve requirement, and what open market operation will it perform (3 answers).
Lower discount rate
Lower reserve requirement
Buy bonds
400
What is one possible cause for the shift depicted in the graph? AND what effect will this shift have on the amount of investment occuring? 
Increase in savings or net capital inflow
Causes increase in investment
400
What are the components of the M2 money supply?
M1 (currency, checking & savings accounts) plus small time deposits (CDs)
500
This bank is only holding the minimum amount of required reserves.
If Leonardo deposits $1000 of cash into his bank account, what is the maximum possible increase in the money supply?
$1500 increase
500
Under ample reserves, what are the two administered rates that the Federal Reserve adjusts to change the policy rate?
Discount rate & interest on reserve balances
500
Under limited reserves, what are the Federal Reserve's three monetary policy tools?
Discount Rate
Open Market Operations
Reserve Requirement
500
What is one monetary policy action the Federal reserve might have taken to effect the depicted change, and what would the effects of this change be on national output and price level?
Lower discount rate OR lower reserve requirement OR buy bonds
Effect: increase in price level and output
500
What are two differences between the loanable funds market and the money market?
Supply of money is vertical, supply of loanable funds is upward sloping
Loanable funds market is trading long-term loans, money market is trading money (overnight loans)