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5 Written questions

5 Matching questions

  1. reserves
  2. change in Y
  3. medium of exchange
  4. policy mix
  5. FDIC (Federal Deposit Insurance Corporation)
  1. a incr. Y = incr. MD (shift line right)
    decr. Y = decr. MD (shift line left)
  2. b people will accept money in exchange for goods and services; simplifies exchange process
  3. c deposits that a bank has at the federal reserve plus its cash on hand; apprx. 1.5-2% held as vault cash
  4. d combination of monetary and fiscal policy in use at a given time
  5. e created in 1933 and insures deposits in banks

5 Multiple choice questions

  1. decr. 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
  2. interest rate, expectations about future sales, capital utilization rate, cost of capital relative to the cost of labor
  3. influence; pressure exerted by the Fed on member banks to discourage them from borrowing heavily
  4. if Fed lowers RR - creates excess reserves and money supply; fed incr. RR then decr. excess reserves and money supply
  5. close substitutes for transactions money such as savings accountsand money market accounts

5 True/False questions

  1. federal funds rateinterest rate that banks pay to the Fed to borrow money from it; if DR incr. banks borrow less (decr. MS); DR decr. banks borrow more (incr. MS)


  2. store of valuean asset that can trasnport purchasing power from one time period to another; earn income in the present and spend it in the future


  3. non-synchronization of income and spendingmismatch b/w money "inflow" and the timing of the money "outflow"


  4. change in pricesincr. Y = incr. MD (shift line right)
    decr. Y = decr. MD (shift line left)


  5. expansionary fiscal policymakes gov't spending multiplier smaller; incr. G=incr. AE=incr. Y= incr. MD= incr. r= decr. I= decr. AE= decr. Y


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