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5 Written questions

5 Matching questions

  1. M3 (L)
  2. rate vs yield
  3. opportunity cost
  4. liquidity property of money
  5. unit of account
  1. a amt. of "compounding" will impact yield
  2. b value of what you give up; = interest
  3. c 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
  4. d everything is included in M2 and large CD's (over $100,000) and other assets
  5. e money serves asw a consistent way of quoting prices; allows us to compare relative values easily (money should be divisible)

5 Multiple choice questions

  1. everything in M1 and savings accounts, money market accounts, small CD's (under $100,000), and other "near monies"
  2. people will accept money in exchange for goods and services; simplifies exchange process
  3. 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
  4. a system in which banks keep less than 100% of their deposits available for withdrawal
  5. buying and selling of gov't securities by the Fed to change reserves; fed buys bonds = incr. MS; fed sells bonds = decr. MS

5 True/False questions

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

          

  3. change in pricesincr. prices = incr. MD (shift line right) and vice versa

          

  4. change in money demand curveincr. Y = incr. MD (shift line right)
    decr. Y = decr. MD (shift line left)

          

  5. required reserve ratioif Fed lowers RR - creates excess reserves and money supply; fed incr. RR then decr. excess reserves and money supply

          

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