AP Macro Unit 4 Review (Financial Markets)

If the federal reserve buys $400,000 in securities; the RRR is 20%; and banks hold no excess reserves, then the MS

When real interest rates decline, the price of bonds (previously issued) will

A bank holds $500,000 in demand deposits and $120,00 in total reserves. The RRR is 20%; how much can the bank loan?

In the money market, the money supply is vertical because

M1 includes which of the following (choose all that apply)

When the nominal interest rate is high

By decreasing the discount rate,

The real interest rate is

If the reserve requirement is 20 percent, then the money multiplier is

In the loanable funds market

Which of the following is the Fed's preferred tool to combat recession?

To reduce the inflation, the Federal Reserve could

If the inflation rate is 2%; the real interest rate is 5%, then the nominal interest rate is

In the loanable funds market, supply is based on

When the MS expands, nominal interest rates will

A negative output gap could be countered by

The demand for money in the money market will shift to the right when

A decrease in the nominal interest rate will

Given the equation, MV=PQ, an increase in the money supply would

Which of the following is true about the federal funds rate? (choose all that apply)