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5 Written questions

5 Matching questions

  1. reserves
  2. monetary policy
  3. near monies
  4. commodity of money
  5. money multiplier
  1. a has value in itself; itemse used as money that also have some intrinsic value
    ex: gold, cigarettes, cattle, candy bars
  2. b behavior of fed reserve concerning money supply and how they manipulate the money supply
  3. c how much deposits incr. for every $1 incr. in reserves
  4. d deposits that a bank has at the federal reserve plus its cash on hand; apprx. 1.5-2% held as vault cash
  5. e close substitutes for transactions money such as savings accountsand money market accounts

5 Multiple choice questions

  1. Goal: to expand economy/ incr. Y; determined by fed every 6 weeks; incr. MS in order to incr. Y; affects money market (monetary policy); incr. MS= decr. r= incr. I= incr. AE= incr. Y= incr. MD= incr. r= decr. I= decr. AE= decr. Y
  2. annual interest payment on a loan EXPRESSED AS A % OF THE LOAN
    ex: $100 interest/$1000 bond = 10%
  3. buying and selling of gov't securities by the Fed to change reserves; fed buys bonds = incr. MS; fed sells bonds = decr. MS
  4. central banking system of the U.S.
  5. MS<MD; at low interest rates ppl hold cash and sell bonds; decr. demand for bonds = decr. price of bonds = incr. interest rates

5 True/False questions

  1. change in money demand curveincr. money supply = decr. interest rates and vice versa; inversely proportional


  2. non-synchronization of income and spendingdecr. G (or incr. T, decr. C) in order to decr. output/ rate of growth (in recession); affects goods market (AE, fiscal policy); decr. G= decr. AE2= decr. Y2= decr. MD= decr. r= incr. I= incr. AE3= incr. Y3


  3. expansionary fiscal policydetermined by legislature once a yr; an incr. in gov't spending (G) or a reduction in net taxes (T) aimed at increasing aggregate output/ income (Y)


  4. high interest ratesquantity of money demanded = high (hold cash)


  5. discount rateannual interest payment on a loan EXPRESSED AS A % OF THE LOAN
    ex: $100 interest/$1000 bond = 10%


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