5 Written questions
5 Matching questions
- Nominal Interest rate
- What open market operation decreases the money supply?
- Consumer Surplus
- Medium of Exchange
- Why will Currency Reserves not expand money supply by as much as the potential multiplier?
- a Money used to buy goods and services
-fiat money: money that has no intrinsic value
-More efficient to use money
- b When the fed sells bonds.
- c difference between the maximum amount consumers would be willing to pay and the amount that they actually pay
-below demand curve but above the price
- d percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principle.
- e -Some people decide to hold currency rather than deposit it in the bank
-Banks fail to use all of the new excess reserves to extend loans
5 Multiple choice questions
- -reveals the cost durings the current period of purchasing the items included in GDP relative to the cost during the base year
-includes capital goods and other goods purchased by businesses and government
-(Normal GDP x GDP deflator / GDP deflator)
- unemployment due to recessions and inadequate labor demand
- borrowers lose, lenders gain
- a change in expenditures will have a greater impact than the initial change
- when many people drastically increase their savings and reduce consumption, total savings may decrease
5 True/False questions
Quantity theory of Money → change in money supply will cause a proportional change in the price level. PY=MV
-Rate of Inflation + Growth rate of real output=Growth rate of money supply + growth rate of velocity
Shifters of Short Run Aggregate Supply → -Change in Resource base
-change in technology
-Change in arrangements that affect productivity
Unit of Account → -unit of measurement used by most people to post prices and keep track of revenues and costs
Logrolling → the practice of trading votes by a politician to get the necessary support to pass desired legislation
Height of Demand Curve → Downward sloping because as wage decrease, firms will want to employ more people