The real interest rate is approximately equal to the nominal interest rate ______________ the inflation rate.

divided by
multiplied by
minus
plus

An economy has $14 million of currency outside the banks and $50 million inside the banks, and $26 million of demand deposits and $140 million in personal savings deposits at chartered banks. The value of M1 is ___________.

$190 million
$166 million
$40 million
$180 million

The table shows the balance sheet for Ralph's Bank. If the bank's desired reserve ratio is 15 percent, Ralph's Bank has desired reserves of _______ million.

$133
$1,500
$300
$500

The table shows the balance sheet for Ralph's Bank. If the bank's desired reserve ratio is 15 percent, Ralph's Bank has excess reserves of _______ million.

$1,500
$500
$200
$300

When the interest rate rises, interest-sensitive expenditure ___________________.

increases because the interest-sensitive expenditure curve shifts rightward
decreases along the interest-sensitive curve
increases along the interest-sensitive curve
decreases because the interest-sensitive expenditure curve shifts leftward

If an increase in total bank reserves from $400,000 to $800,000 increases total bank deposits from $1 million to $2 million, then the deposit multiplier is ___________.

4.00
2.50
0.40
0.25

If an increase in total bank reserves from $400,000 to $800,000 increases total bank deposits from $1 million to $2 million, then the desired reserve ratio is ___________.

4.00
0.40
2.50
0.25

Suppose that the desired reserve ratio is 20 percent. If Bartholomew deposits $50,000 into his bank, by how much do total deposits in the banking system increase?

$62,500
$250,000
$50,000
$10,000

An increase in the interest rate creates a _______ the money demand curve and a decrease in real GDP creates a _______ the money demand curve.

leftward shift of; movement down along
movement up along; leftward shift of
movement down along; rightward shift of
movement up along; movement down along

If households and firms are holding more real money than they desire, they will _______ financial assets and the interest rate will _______.

buy; rise
buy; fall
sell; fall
sell; rise

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