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5 Written questions

5 Matching questions

  1. Nominal Interest rate
  2. What open market operation decreases the money supply?
  3. Consumer Surplus
  4. Medium of Exchange
  5. Why will Currency Reserves not expand money supply by as much as the potential multiplier?
  1. a Money used to buy goods and services
    -fiat money: money that has no intrinsic value
    -More efficient to use money
  2. b When the fed sells bonds.
  3. 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
  4. d percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principle.
  5. 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

  1. -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)
  2. unemployment due to recessions and inadequate labor demand
  3. borrowers lose, lenders gain
  4. a change in expenditures will have a greater impact than the initial change
  5. when many people drastically increase their savings and reduce consumption, total savings may decrease

5 True/False questions

  1. Quantity theory of Moneychange 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


  2. Shifters of Short Run Aggregate Supply-Change in Resource base
    -change in technology
    -Change in arrangements that affect productivity


  3. Unit of Account-unit of measurement used by most people to post prices and keep track of revenues and costs


  4. Logrollingthe practice of trading votes by a politician to get the necessary support to pass desired legislation


  5. Height of Demand CurveDownward sloping because as wage decrease, firms will want to employ more people


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