Unit 4 Macro Financial Sector

If the economy is experiencing an inflationary gap with high demand, the Fed Reserve is most likely to

There is an inverse relationship between interest rates and the quantity of money demanded.

Jagger wants to buy a hat. He goes to 2 different stores to compare prices. Money is acting as a...

All of the following are part of the M1 Money Supply except

What happens to interest rates when the Fed buys bonds on the open market

What is the most effective monetary policy used by the FED?

What is the difference between real and nominal interest rate?

Which of the following is the best example of money as a medium of exchange?

If the Req. Reserve is 10%, actual reserves are $10 mil, and $ in circulation is equal to $20 mil, M1 at most will equal

If interest rates increase, what will happen to bond prices?

Bonds (aka securities) are loans, or IOUs, that represent debt that the govt./business/individual must repay the lender.

How do banks create money?

To decrease the money supply the Federal Reserve can do all of the following except

If the FED wants to decrease the money supply, What could they do?

Loan is 5% real interest rate w/ expected 3% inflation. Actual inflation rate ends up 6%, what is real interest rate?

The asset with the highest liquidity below is:

To decrease the Money Supply, the FED should decrease the Discount Rate.

The Federal Funds rate is the interest rate that

Which of the following would most likely increase the price of bonds?

With a 10% reserve requirement a $2000 checking account deposit will possibly create _______ amount of money.

The real interest rate equals the

All of the following are considered bank assets on a balance sheet except

Under what circumstances would increasing the money supply effectively increase real GDP?