Upgrade to remove ads
Terms in this set (32)
Types of Money
-Gold, Solver, Copper
Functions of Money
1. Medium of Exchange
2. Measure of Value
3. Store of Value
Who controls the money supply of every country
Who controls the money in the U.S.
How many many districts/branches are a part of the Federal Reserve.
3 Tools used to Control Money Supply
1. OMO (Open Money Operations)
2.DR (Discount Rate)
3.RR (Reserved Ratio)
What makes up the Monetary Policy and who controls it?
OMO, DR, RR
Controlled by the Fed.
For OMO, if the Fed. buys U.S. securities...
MS goes up and it shows that the economy is in a recession.
For OMO, if the Fed. sells U.S. Securities...
MS goes down and it shows that the economy is in an Inflation
For DR, when banks borrow from each other for a short term is called...
For DR, when the bank borrows from the Federal Reserve for long term is called...
What is DR
Interest on borrowing money from the Fed.
If DR goes up...
Interest rate goes up, Investments go down, Employment goes down, Income goes down, Aggregate Demand goes down. It is a time of Inflation.
If DR goes down...
Interest rate goes down, Investments go up, Employment goes goes up, Income goes up, Aggregate Demand goes up. It is a time of Recession.
What is the Reserve Rate?
The percent of money that the bank has to keep in their reserves.
If RR goes up...
Loans go down, Investments go down, Employment goes down, Income goes down, and Aggregate Demand goes down.
If RR goes down...
Loans go up, Investments go up, Employment goes up, Income goes up, and the Aggregate Demand goes up.
How do you find the Money Multiplier (MM)?
Total Deposits equal what?
Required Reserves + Excess Reserves
3 Types of Money (Based on Liquidity)
M1, M2, M3
Currency + Transportation Deposits (Checking Account, Now Account, Traveler's Checks)
M1 + Savings Accounts, Time Deposits (CDs below $100K), Money Market (Stocks Bonds, Mutual Funds, IRAs, 401K)
M2 + CDs above $100K
Suppose Oscar withdraws $100 from his checking account and deposits it into his savings account. This transaction causes M1 to
Decrease by $100 and M2 to remain the same
Suppose Jason takes $150 he had in his wallet and deposits it into his checking account. The immediate result of this transaction is that M1
And M2 do not change
Suppose Megan withdraws $75 from her savings account and deposits it into her checking account. This transaction causes M1 to
Increase by $75 and M2 to remain the same
Suppose Jared takes $200 from his savings account and holds it as cash. The immediate result of this transaction is that M2
Remains the same and M1 increase by $200
Bradley digs out $50 from his cookie jar and deposits it in his checking account. The immediate result of this transaction is that M1 has
The Federal Reserve System was created by
The Federal Reserve Act 1913
Regional Fed banks are responsible for all of the following except
Cash checks for large non-financial corporations
Monetary Policy is set by the ...
Board of Governors
Which of the following represents the lending capacity of an individual (non-monopoly) bank?
Total Reserves - Required Reserves
YOU MIGHT ALSO LIKE...
Government Fed Quiz
AP Econ study guide
Chapter 15: Monetary policy
Econ 222 midterm 2
OTHER SETS BY THIS CREATOR
RTC Chain of Command
The Eleven General Orders of Sentry