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AP Macro: The Federal Reserve & Monetary Policy Flashcards | StudBud
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AP Macro: The Federal Reserve & Monetary Policy
AP Macro: The Federal Reserve & Monetary Policy
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Questions
28
Answers
1
Which of the following sequences is correct?
raise reserve ratio : increase MS : decrease interest rate
raise reserve ratio : decrease MS : increase interest rate
raise reserve ratio : decrease MS : decrease interest rate
raise reserve ratio : increase MS : increase interest rate
2
What is the money multiplier formula?
1 - reserve ratio
1 + reserve ratio
1 / reserve ratio
reserve ratio2
3
Which of the following would shift the demand curve for money?
government deficit spending
the purchase of bonds by the Fed
a decrease in the discount rate
an increase in personal savings
4
How many members are on the Board of Directors of the Federal Reserve?
7
12
3
15
5
The rate that banks charge each other for loans is called the...
nominal interest rate
reserve rate
discount rate
federal funds rate
6
If the reserve ratio is 20% and the Fed buys $5,000 in bonds from banks, banks can initially...
lend $5,000
lend $500
lend $1,000
lend $4,000
7
A decrease in the discount rate will result in which of the following?
an increase in interest rates
lower real wages
an increase in the money supply
higher real wages
8
Who is this?
A former Chairman of the Board of Governors of the Fed
Ms. Mayberry's love interest
The 3rd greatest man who ever lived
All of the above
9
The Fed would purchase bonds from banks in order to...
decrease the money supply
increase the money supply
10
The supply curve on the money market graph represents...
the entire money supply
money that banks have available for loans
11
If the r.r. is 10% and the Fed buys $1,000 in bonds from banks , the max ΔMS is
$10,000
$900
$1,000
$9,000
12
On the loanable funds graph, the supply curve is...
upward sloping
horizontal
vertical
downward sloping
13
On a scale of 1 to 10, how excited does Nancy look in this photo?
5
10
1
14
How many members are on the Federal Open Market Committee?
3
7
12
15
15
The rate that banks pay when they borrow money from the Fed is called the...
real rate
federal funds rate
discount rate
reserve rate
16
An increase in the money supply will...
Raise interest rates
Lower interest rates
17
If the reserve ratio is 10% and demand deposits increase by $1,000, banks can initially...
lend $100
lend $1,000
lend $900
18
If the Fed wanted to discourage banks from borrowing and lending money, it could...
lower the discount rate
buy bonds
raise the discount rate
19
Which of the following equations is set up correctly?
nominal interest rate = real interest rate + inflation rate
real interest rate = nominal interest rate + inflation rate
nominal interest rate + real interest rate = inflation rate
nominal interest rate = real interest rate - inflation rate
20
How many Federal Reserve district banks are there in the U.S.?
15
3
7
12
21
The reserve requirement applies to which of the following transactions?
loans from the Fed
demand deposits
bonds sold to the Fed
22
The nominal interest rate is determined by the...
money market graph
loanable funds graph
23
Which of the following sequences is correct?
lower discount rate : decrease MS : increase interest rate
lower discount rate : increase MS : decrease interest rate
lower discount rate : decrease MS : decrease interest rate
lower discount rate : increase MS : increase interest rate
24
Would you rather...
have a permanently stuffy nose
have a permanently runny nose
25
If the r.r. is 10% and banks borrow $1,000 from the Fed @ the discount rate, the max ΔMS is
$1,000
$10,000
$900
$9,000
26
If the r.r. is 10% and demand deposits increase by $1,000, the max change in the MS is
$1,000
$900
$9,000
$10,000
27
Which of the following sequences is correct?
buy bonds : decrease MS : increase interest rate
buy bonds : decrease MS : decrease interest rate
buy bonds : increase MS : increase interest rate
buy bonds : increase MS : decrease interest rate
28
Ms. Mayberry's adorable new kitten is named after...
Elizabeth Bennett
Senator Elizabeth Warren
Queen Elizabeth
Elizabeth Taylor
