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5 Written Questions

5 Matching Questions

  1. policy mix
  2. unit of account
  3. moral suasion
  4. rate vs yield
  5. near monies
  1. a influence; pressure exerted by the Fed on member banks to discourage them from borrowing heavily
  2. b money serves asw a consistent way of quoting prices; allows us to compare relative values easily (money should be divisible)
  3. c combination of monetary and fiscal policy in use at a given time
  4. d amt. of "compounding" will impact yield
  5. e close substitutes for transactions money such as savings accountsand money market accounts

5 Multiple Choice Questions

  1. 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
  2. direct exchange of goods and services for other goods and services; must have a "double coincidence of wants"
  3. mismatch b/w money "inflow" and the timing of the money "outflow"
  4. and order or decree; items designated as money that are intrinsically worthless
  5. market where financial instruments are exchanged and the equilibrium of the interest rate is determined

5 True/False Questions

  1. interest rateannual interest payment on a loan EXPRESSED AS A % OF THE LOAN
    ex: $100 interest/$1000 bond = 10%


  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. interestfee borrowers pay to lenders for the use of their funds


  4. money multiplierhow much deposits incr. for every $1 incr. in reserves


  5. 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)


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