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5 Written questions

5 Matching questions

  1. reserves
  2. M1 (transaction money)
  3. barter
  4. interest sensitivity (insensitivity) of planned investment
  5. near monies
  1. a expanding the supply of currency so rapidly that it loses its value
  2. b direct exchange of goods and services for other goods and services; must have a "double coincidence of wants"
  3. c close substitutes for transactions money such as savings accountsand money market accounts
  4. d how responsive planned investment is to the interest rate; interest sensitivity = "I" responds a great deal to change in "r"; interest insensitivity = "I" responds very little to a change in "r"
  5. e deposits that a bank has at the federal reserve plus its cash on hand; apprx. 1.5-2% held as vault cash

5 Multiple choice questions

  1. avg. level of money that earns the most ineterest taking the cost of switching into account
  2. quantity of money demanded = low b/c high opportunity cost (convert to bond)
  3. makes money easy to obtain; federal policies that expand money supply (decr. interest rates) in an effort to stimulate the economy
  4. an asset that can trasnport purchasing power from one time period to another; earn income in the present and spend it in the future
  5. banks and other institutions that act as a link b/w those who have money to lend and those who want to borrow money

5 True/False questions

  1. run on a bankmoney serves asw a consistent way of quoting prices; allows us to compare relative values easily (money should be divisible)

          

  2. determinants of investmentinterest rate, expectations about future sales, capital utilization rate, cost of capital relative to the cost of labor

          

  3. open market operationsmarket where financial instruments are exchanged and the equilibrium of the interest rate is determined

          

  4. monetary policymakes money easy to obtain; federal policies that expand money supply (decr. interest rates) in an effort to stimulate the economy

          

  5. non-synchronization of income and spendingdecr. 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