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AP ECON QUIZ- Monetary Policy Flashcards | StudBud
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AP ECON QUIZ- Monetary Policy
AP ECON QUIZ- Monetary Policy
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AP Macro Econ Review
Flashcards
18 cards
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Questions
18
Answers
1
To counteract inflation, what can the Federal Reserve raise?
Interest Rates
Government Spending
Open Market Operations
Loans
2
If the Fed Res buys bonds, then...
AD/MD Increase
Taxes increase
Interest Rates Decrease
AD/MD Decreases
3
The effects of an Expansionary Monetary Policy involve…
PL ↑/ Output ↑/ Unemployment ↑
PL ↑/ Output ↓/ Unemployment↑
PL ↓/ Output ↑/ Unemployment ↓
PL ↓/ Output↑/ Unemployment ↓
4
Demand Deposit= 300| Excess reserves increase by 240. What is the reserve ratio?
.2
.3
.1
.5
5
If the discount rate increases, what happens to the Money Supply?
A decrease
An increase
No change
Unknown
6
What is the discount rate?
Federal Reserve Loan Rate for Banks
Government Borrowing Rate
Federal Reserve Loan Rate for Consumers
Government Loan Rate for Banks
7
What is the difference between Monetary and Fiscal Policy?
Fiscal- Gov| Monetary- Federal Reserve
Monetary- Federal Reserve| Fiscal- Gov
Monetary- Gov| Fiscal- Gov
Fiscal- Cat Bank |Monetary- Dog Lawyers
8
In order to pull out of a recession, what actions will help?
Lower wages
Government Pensions
Tax breaks
Spending
9
If AD/MD increases, how will the nominal interest rate and bond price change?
Up/ Up
Down/ No change
Down/ Up
Up/ Down
10
An increase in the money supply will do what to the interest rates and real output?
Up| Down
Down| Down
Down| Up
Down| Down
11
What are the 3 roles of money?
Medium of Exchange
Store of Value
Fuel
Unit of Account
12
A customer deposits 10,000 dollars into their checking account with a 10% RR. Excess Reserves?
9000
1000
50
5000
13
A bank that charges 10% interest rate increases by 4% next year.What is the real interest rate?
10%
6%
14%
4%
14
The maximum potential growth of the money supply depends upon...
Government loaning/ Consumers spending
Federal Reserve borrowing/ Consumers loaning
Banks borrowing/ Consumers lending
Banks loaning/ Consumers borrowing
15
If a bank runs out of money, what actions can be taken to restore the money?
Tax Increase
Federal Reserve Loan
Alternate Bank Loan
16
Which will most likely occur in an economy if more money is demanded than is supplied?
Interest rates will decrease
Investment will increase
MD will shift to the left
Interest rates will increase
17
What is the Reserve Requirement Ratio in the table?
.1
.5
.8
.2
18
Under a fractional reserve banking system, banks are required to...
Insure their deposits against losses and bank runs
Charge the same interest rate on all their loans
Pay a fraction of their interest income in taxes
Keep part of their demand deposits as reserves
