1. Which expresses the correct relationship between the monetary base and the money supply?

a. M = m/B

b. B = m x M

c. m = M x B

d. B = M/m

2. Bank reserves (R) may be written as

a. R = B - C^p

b. R = F_b + C_b

c. both of the above

d. none of the above

3. Suppose, in a given week, float increases by $400 million, foreign deposits increase by $300 million, and discounts and advances fall $100 million. To keep the monetary base constant the Fed must

a. sell $600 million from its portfolio of securities

b. buy $800 million of government securities

c. buy $600 million of government securities

d. neither buy nor sell securities - maintain its portfolio constant

4. The monetary base is sometimes defined as the "net monetary liabilities" of the

a. Federal Reserve and depository institutions

b. Treasury and depository institutions

c. Federal Reserve and Treasury

d. Federal Reserve

5. The three most volatile and unpredictable sources of the monetary base are

a. F_t, A, and Float

b. G, OA, and Float

c. G, F_f, and A

d. G, OA, and TCu

ANSWER KEY 1d, 2c, 3d, 4c, 5a