1) Everything else held constant, an increase in currency holdings will cause
A) the money supply to rise.
B) the money supply to remain constant.
C) the money supply to fall.
D) checkable deposits to rise.
2) Everything else held constant, a decrease in holdings of excess reserves will mean
A) a decrease in the money supply.
B) an increase in the money supply.
C) a decrease in checkable deposits.
D) an increase in discount loans.
Overview of the Money Supply Process
3) In the model of the money supply process, the Federal Reserve”s role in influencing the money supply is represented by
A) both the required reserve ratio and the market interest rate.
B) the required reserve ratio, nonborrowed reserves, borrowed reserves, and the market interest rate.
C) only borrowed reserves.
D) only nonborrowed reserves.
4) In the model of the money supply process, the depositor”s role in influencing the money supply is represented by
A) only the currency ratio.
B) both the currency ratio and excess reserve ratio.
C) the currency ratio, excess reserve ratio, and the market interest rate.
D) only the market interest rate.