Chapter 15: Q. 15 (page 348)
The reserve ratio is percent. What is the value of the potential money multiplier?
The value of potential money multiplier is when the reserve ratio is
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During the 1945-1946 Hungarian hyperinflation, when the rate of inflation reached quadrillion percent per month, the Hungarian government discovered that the real value of its tax receipts was falling dramatically. To keep real tax revenues more stable, it created a good called a "tax pengล," in which all bank deposits were denominated for purposes of taxation. Nevertheless, payments for goods and services were made only in terms of the regular Hungarian currency, whose value tended to fall rapidly even though the value of a tax pengรถ remained stable. Prices were also quoted only in terms of the regular currency. Lenders, however, began denominating loan payments in terms of tax pengรถs. In what ways did the tax pengรถ function as money in Hungary in 1945 and 1946?
In what sense is currency a liability of the Federal Reserve System?
Identify whether each of the following items is counted in M1 only, M2 only, both M1 and M2, or neither.
a. A balance in a transactions deposit at a mutual savings bank
b. A time deposit in a New York bank
c. A time deposit an elderly widow holds at her credit union
d. A traveler's check not issued by a bank
e. A savings deposit
During the late , prices quoted in terms of the Israeli currency, the shekel, rose so fast that grocery stores listed their prices in terms of the U.S. dollar and provided customers with dollarshekel conversion tables that they updated daily. Although people continued to buy goods and services and make loans using shekels, many Israeli citizens converted shekels to dollars to avoid a reduction in their wealth due to inflation. In what way did the U.S. dollar function as money in Israel during this period?
Describe the basic structure and functions of the Federal Reserve System.
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