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AP Macro Monetary Policy and Graphs Flashcards | StudBud
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AP Macro Monetary Policy and Graphs
AP Macro Monetary Policy and Graphs
20 terms
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StudBud Administration
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The Fed, Monetary Policy, Money Market, Loanable Funds
Flashcards
20 cards
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Questions
20
Answers
1
If the Fed buys $100 B in bonds and the Reserve Ratio is 10% the money supply will ultimately
expand by $1000 billion
contract by $100 billion
contract by $10 billion
expand by $ 10 billion
2
How did the shift effect nominal interest rates:
Decrease
Increase
3
What is the main shifter of the money supply curve (Sm)
Government fiscal policy
changes in the Interest
Federal Reserve monetary policy
changes in foreign investment
4
The most important monetary policy tool of the FED when reserves are AMPLE is
Interest on Reserves
Discount Rate
Open Market Operations
Reserve Requirement
5
Based on this graph the country is in a ___ and the Fed is ___ to fix it. (Assuming reserves are limited)
Recessionary Gap......buying bonds
Inflationary gap.....buying bonds
Inflationary gap....selling bonds
Recessionary Gap .....selling bonds
6
Which of the following correctly describes expansionary monetary policy:
↓IR ↑IG ↓AD
↑IR ↓IG ↓AD
↓IR ↑IG ↑AD
↑IR ↑IG ↑AD
7
Which of these is the short term interest rate that commercial banks charge each other?
federal funds rate
special interest rate
discount rate
capital rate
8
In this region of the reserve market, all of the following can affect the interest rate EXCEPT
Discount Rate
Interest on Reserves
Reserve Requirement
OMO
9
The part of the demand for money based on the need to hold money for purchases is ____ demand.
Inflexible
Emergency
Transaction
Asset
10
What is monetary policy?
actions the Fed takes to influence inflation & real GDP
amount of money that the Fed banks print up & distribute
the amount of money the federal government spends
the decision to have federal or state banks
11
If the Fed sells $100 million in Treasuries (bonds) when the RR is 20% then the total Δ in:
the money supply increases by $100 Billion
the Money supply decreases by $100 Billion
the money supply increases by $500 Million
the money supply decreases by $500 Million
12
Which combination of fiscal and monetary policy would fix a recession?
decrease government spending...increase money supply
increase government spending....increase money supply
increase government spending...decrease money supply
decrease taxes....decrease money supply
13
The federal reserve is conducting a ____ monetary policy to fight ___.
Contractionary.....Inflation
Expansionary...Recession
Contactionary...Recession
Expansionary .....Inflation
14
The Federal Reserve does all of the following EXCEPT
regulate banks
conduct fiscal policy
provide financial services
conduct monetary policy
15
Which of the following actions would the Fed take to fight inflation if reserves are limited?
increase government spending
increase the money supply
reduce the money supply
raise taxes
16
What acts as a ceiling on the policy rate on the reserve market graph?
Prime Rate
Rate on reserves
Federal Funds Rate
Discount Rate
17
Asset demand for holding money is mostly affected by changes in
expectations
interest rates
income
resource costs
18
How did the FED cause these changes?
increase rate on reserves only
decrease rate on reserves only
decrease administered rates
Increase administered rates
19
Based on this graph (if reserves were limited) the FED would
Buy Bonds
Raise the discount rate
raise the reserve requirement
Sell Bonds
20
The shift below could be caused by:
Increase in Real GDP
Increase in electronic payments for goods
Decrease in Nominal Interest Rate
Decrease in the price level
