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5 Written questions

5 Matching questions

  1. expansionary fiscal policy
  2. FDIC (Federal Deposit Insurance Corporation)
  3. legal tender
  4. fiat (token) money
  5. interest rate = r2
  1. a money that a gov't has required to be accepted in settlement of debts; medium legitamacy
  2. b and order or decree; items designated as money that are intrinsically worthless
  3. c 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)
  4. d created in 1933 and insures deposits in banks
  5. e MS<MD; at low interest rates ppl hold cash and sell bonds; decr. demand for bonds = decr. price of bonds = incr. interest rates

5 Multiple choice questions

  1. incr. Y = incr. MD (shift line right)
    decr. Y = decr. MD (shift line left)
  2. amt. of "compounding" will impact yield
  3. annual interest payment on a loan EXPRESSED AS A % OF THE LOAN
    ex: $100 interest/$1000 bond = 10%
  4. federal policies that contract the money supply (raising interest rates) in an effort to restrain the economy
  5. makes it a good medium of exchange and store value; it's portable and durable so it's easliy exchanged for goods; how easily something can be exchanged and converted

5 True/False questions

  1. moneyanything that is generally acceptable to sellers in exchange for goods and services; accepted as a medium of exchange


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


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


  4. contractionary monetary policyGoal: 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


  5. store of valueannual interest payment on a loan EXPRESSED AS A % OF THE LOAN
    ex: $100 interest/$1000 bond = 10%