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Macro unit 3 Test

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5 Written Questions

4 Matching Questions

  1. expansionary fiscal policy
  2. commodity of money
  3. required reserve ratio
  4. money
  1. a 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)
  2. b anything that is generally acceptable to sellers in exchange for goods and services; accepted as a medium of exchange
  3. c has value in itself; itemse used as money that also have some intrinsic value
    ex: gold, cigarettes, cattle, candy bars
  4. d if Fed lowers RR - creates excess reserves and money supply; fed incr. RR then decr. excess reserves and money supply

5 Multiple Choice Questions

  1. incr. money demand = incr. interest rates and vice versa; proportional
  2. interest rate, expectations about future sales, capital utilization rate, cost of capital relative to the cost of labor
  3. amt. of "compounding" will impact yield
  4. deposits that a bank has at the federal reserve plus its cash on hand; apprx. 1.5-2% held as vault cash
  5. difference b/w a bank's actual reserves and its required reserves; how much they can loan/ incr. money supply
    excess=actual-RR

5 True/False Questions

  1. medium of exchangepeople will accept money in exchange for goods and services; simplifies exchange process

          

  2. links b/w goods and money marketmarket where goods and services are exchanged and the equilibrium level of the Aggregate Output (y) is determined

          

  3. M3 (L)direct exchange of goods and services for other goods and services; must have a "double coincidence of wants"

          

  4. liquidity property of moneyhas value in itself; itemse used as money that also have some intrinsic value
    ex: gold, cigarettes, cattle, candy bars

          

  5. contractionary monetary policydecr. 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

          

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