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5 Written questions

5 Matching questions

  1. expansionary fiscal policy
  2. barter
  3. medium of exchange
  4. required reserve ratio
  5. excess reserves
  1. a direct exchange of goods and services for other goods and services; must have a "double coincidence of wants"
  2. b if Fed lowers RR - creates excess reserves and money supply; fed incr. RR then decr. excess reserves and money supply
  3. c difference b/w a bank's actual reserves and its required reserves; how much they can loan/ incr. money supply
  4. d determined 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)
  5. e people will accept money in exchange for goods and services; simplifies exchange process

5 Multiple choice questions

  1. 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
  2. behavior of fed reserve concerning money supply and how they manipulate the money supply
  3. created in 1933 and insures deposits in banks
  4. everything in M1 and savings accounts, money market accounts, small CD's (under $100,000), and other "near monies"
  5. MS>MD; excess supply; doesn't last long; at high interest rate ppl will demand bonds instead of cash; incr. demand for bonds =incr. price of bonds = decr. interest rate

5 True/False questions

  1. money multipliermarket where financial instruments are exchanged and the equilibrium of the interest rate is determined


  2. M3 (L)anything that is generally acceptable to sellers in exchange for goods and services; accepted as a medium of exchange


  3. tight monetary policyfederal policies that contract the money supply (raising interest rates) in an effort to restrain the economy


  4. the optimal balanceoccurs 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


  5. 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


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