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5 Written Questions

5 Matching Questions

  1. liquidity property of money
  2. contractionary monetary policy
  3. financial intermediaries
  4. tight monetary policy
  5. open market operations
  1. a banks and other institutions that act as a link b/w those who have money to lend and those who want to borrow money
  2. b decr. MS in order to decr. Y; decr. MS= incr. R= decr. I= decr. AE= decr. Y= decr. MD= decr. r= incr. I= incr. AE= incr. Y
  3. c federal policies that contract the money supply (raising interest rates) in an effort to restrain the economy
  4. d makes it a good medium of exchange and store value; it's portable and durable so it's easliy exchanged for goods; how easily something can be exchanged and converted
  5. e buying and selling of gov't securities by the Fed to change reserves; fed buys bonds = incr. MS; fed sells bonds = decr. MS

5 Multiple Choice Questions

  1. occurs when many of those who have claims on a bank (or deposits) present their claims at the same time; everyone wants their money at the same time
  2. expanding the supply of currency so rapidly that it loses its value
  3. money serves asw a consistent way of quoting prices; allows us to compare relative values easily (money should be divisible)
  4. makes money easy to obtain; federal policies that expand money supply (decr. interest rates) in an effort to stimulate the economy
  5. tendency for an increase in gov't spending to case reductions in private investment spending

5 True/False Questions

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

          

  2. currency debasementmoney serves asw a consistent way of quoting prices; allows us to compare relative values easily (money should be divisible)

          

  3. excess reservesmarket where financial instruments are exchanged and the equilibrium of the interest rate is determined

          

  4. money marketmarket where financial instruments are exchanged and the equilibrium of the interest rate is determined

          

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

          

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