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AP Macroeconomics Unit 4 Review Flashcards | StudBud
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AP Macroeconomics Unit 4 Review
AP Macroeconomics Unit 4 Review
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#macro #econ #macroeconomics
Flashcards
40 cards
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Practice quiz
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Questions
40
Answers
1
Crowding out results in...
An increase in both consumer spending and investment
A decrease in both consumer spending and investment
A increase in consumer spending and decrease in investment
A decrease in consumer spending and increase in investment
2
Which of the following correctly shows
expansionary
monetary policy?
MS ↓ ⇨ ir ↓ ⇨ I ↓ ⇨ AD ↑
MS ↓ ⇨ ir ↑ ⇨ I ↑ ⇨ AD ↑
MS ↓ ⇨ ir ↑ ⇨ I ↑ ⇨ AD ↓
MS ↑ ⇨ ir ↓ ⇨ I ↑ ⇨ AD ↑
3
When interest rates increase, bond prices...
decrease
increase
4
Any item of economic value that can be converted into cash is called what?
Liability
Excess reserve
Asset
Discount rate
5
What is required reserve?
The rate the FED charges banks
The amount a bank can loan out
Money deposited in a commercial bank
The percent that banks must hold by law
6
Which of the following has
no
intrinsic value? (Hint: There is more then one answer)
Coins
Silver
Gold
Paper money
7
On a bank balance sheet, the assets must be __________________ the liabilities.
Equal to
Less than
Greater than
8
In the loanable funds market, consumer, business, and government borrowing are changed in...
Demand
Supply
9
Which of the following is
not
a function of money?
To discourage a double coincidence if wants
Medium of exchange
Store of value
Unit of account
10
An agreement between a lender and a borrower is called a what?
Bond
Asset
Loan
Stock
11
What is this graph showing?
Aggregate supply
Philips curve
Aggregate demand
Liquidity trap
12
Who sets the money supply in the United States?
The FED
The public
The government
Commercial banks
13
If ATM technology advances, what will happen to the money market graph?
Money demand will shift left
Money supply will shift left
Money demand will shift right
Money supply will shift right
14
Based on this bank balance sheet, what is the reserve requirement?
15%
20%
5%
10%
15
If income decreases, what will happen to the money market graph?
Money demand will shift left
Money supply will shift left
Money demand will shift right
Money supply will shift right
16
Real interest rate...
Is not adjusted for inflation
Is adjusted for inflation
17
Which of the following correctly shows
contractionary
monetary policy?
MS ↓ ⇨ ir ↓ ⇨ I ↓ ⇨ AD ↑
MS ↓ ⇨ ir ↑ ⇨ I ↑ ⇨ AD ↓
MS ↑ ⇨ ir ↓ ⇨ I ↑ ⇨ AD ↑
MS ↓ ⇨ ir ↑ ⇨ I ↓ ⇨ AD ↓
18
Is the present value of $100 received a year from today greater or less than $100 today?
Greater than
Less than
19
Which of these is
not
a shifter of money
demand
?
Income
Price level
Technology
Discount Rate
20
If you were to find $100 and deposit it into a bank, what would happen to the money supply?
It would stay the same
It would decrease
It would increase
21
What is the loanable funds market?
The way individuals budget and spend
The private sector supply and demand of loans
That reserves held in a bank
The money deposited into a checking account
22
Does buying government securities increase or decrease the money supply?
Decrease
Increase
23
The loanable funds market deals with which type of interest rate?
Nominal interest rate
Real interest rate
24
An IOU issued by a borrower with a promise to pay by a certain date is called what?
Stocks
Bonds
Liquidity
Loans
25
Is buying and selling government bonds a shifter of money demand or money supply?
Money supply
Money demand
26
Which of these is
not
included in M1 money?
Currency in circulation
Saving deposits
Checkable bank deposits
Traveler‘s checks
27
What makes money effective? (Hint: There is more then one answer)
It is generally accepted
It is portable
It is waterproof
It is scarce
28
What is a $20 gift card counted as?
M3
M1
M2
None of the above
29
What can an individual buy that represents ownership in a public company?
Bonds
Interest rate
Stocks
Loans
30
Does contractionary monetary policy increase or decrease the money supply?
Increase
Decrease
31
What is the discount rate?
The reserve requirement of commercial banks
The interest rate the FED charges commercial banks
The interest rate commercial banks charge other banks
32
How do you calculate the real interest rate?
Nominal interest rate x inflation rate
Nominal interest rate + inflation rate
Inflation rate-nominal interest rate
Nominal interest rate-inflation rate
33
An increase in the price level (inflation) will change what on the money market graph?
Money supply will shift right
Money demand will shift left
Money demand will shift right
Money supply will shift left
34
Demand deposits are a liability for...
Depositors
Banks
35
Does selling government securities increase or decrease the money supply?
Increase
Decrease
36
What is the money multiplier?
1/reserve ratio
1/interest rate
Reserve ratio/1
1/discount rate
37
The ease with which an asset can be accessed and used as a medium of exchnage is called?
Liquidity
Discount rate
Interest rate
Illiquidity
38
What is the opportunity cost of holding money?
It looses value over time
You can’t buy stocks with it
You can’t put it in a bank account
Possible interest you could be earning
39
What is a "leakage" that could cause the money multiplier to decrease?
People stealing money
People depositing money
People holding money
People spending money
40
Does expansionary monetary policy increase or decrease the money supply?
Increase
Decrease
