4.1 - 4.2
4.3 - 4.4
4.5 - 4.6
4.7
Mr.Latina Triva
100
What is considered the most liquid asset? Also what is liquidity?
Currency
100
What are the three functions of money?
Medium of Exchange
Unit of Account
A store of Value
100
What is the relationship between interest rate and quantity of money demanded? Why?
Inverse relationship between Int rate and Q of money demanded. If interest rates are higher people are going to save their money or place it in the bank. If interests are lower people are more willing to spending and invest their money.
100
What is the discount rate?
Int rate the FED charges commercial banks
If Discount rate decreases, MS increases…
If Discount rate increases, the MS decreases
100
What is my favorite movie of all time?
La La Land (its not even close)
200
What is the formula for Nominal Interest Rate?
N = R I + Expected Inflation
200
What is the difference between M1 and M2 money supply?
M1 --> loaned out becomes M2
200
What are three shifters in the money demand curve?
* price level
* changes in income
* changes in technology
200
Within open market operations what is the primary means of exchange? In other words what are central banks and commercials banks buying and selling from one another?
Bonds
200
If I was on my death bed what would be my last meal?
1. McDonald's
2. My mom's cooking
3. Buzz Bar Fries
4. El Diablo
4
300
If the nominal interest rate is 10% and the inflation rate is 15% what is the real interest rate?
-5% (prices are decreasing)
300
What type of currency is the modern dollar known as? Remember it only has value because as a society we believe in the currency? (This should probably be a higher point value)
Fiat Money
300
What is the only possible shifter of the money supply?
The Fed
300
What is the federal funds rate?
Rate that commercial banks charge one another for borrowing
300
Do I like pineapple on pizza?
Yes
400
What is the difference between a stock and bond?
stock is ownership in company and a bond is form of loan given to the government or a business which the pay back with interest after a given amount of time
400
If the central bank decreases administered interest rates, which of the following will occur?
(A) The price of bonds will increase.
(B) The money supply will decrease.
(C) Total bank reserves will decrease.
(D) Consumption will decrease.
(E) The government will balance its budget.
A (bonds and interest rates have an inverse relationship)
400
Explain contractionary vs expansionary monetary policy in terms of the money supply and AD
Look at responses
Interest rates decrease when the money supply increases because there is more money available for lending, which makes it cheaper to borrow money. This relationship between money supply and interest rates is inverse.
400
What is the loanable funds market?
Relationship between private sector supply and demand of loans.
Effected by real interest rates.
400
What is the name of my first dog?
Bebe
Dai Dai
Ci Ci
Mi Mi
Bill
Bear
Dai Dai
500
What is the relationship between bonds and interest rates?
Int rates fall, Bond prices up
Int rate rises, Bond price falls
500
Bank Balance Sheet FRQ ;)
Assets Liabilities
Req. Reserves Demand Deposits
$2,000 $20,000
Excess Reserves Owner’s Equity
$3,000 $5,000
Treasury Bonds
$5,000
Loans
$15,000
If Bob deposits $1000 into this bank:
What is the required reserve ratio?
Will M1 money supply initially ↑, ↓, stay same?
How much is the required reserves?
How much is the excess reserves?
How much more can the bank initially lend out?
Maximum change in money supply from deposit?
If Bob deposits $1000 into this bank:
What is the required reserve ratio? 10%
Will M1 money supply initially ↑, ↓, stay same? Stay same
How much is the required reserves? $2,100
How much is the excess reserves? $3,900
How much more can the bank initially lend out? $900
Maximum change in money supply from deposit? $9K
500
Which of the following will lead to a decrease in a nation’s money supply in a country where the banking system has limited reserves?
(A) A decrease in income tax rates
(B) A decrease in the discount rate
(C) An open market purchase of government securities by the central bank
(D) An increase in reserve requirements
(E) An increase in government expenditures on goods and services
D
500
What are demand shifters in the loanable funds market?
500
In my classroom I have three jerseys and a sweater. Who are the jerseys of and what is on the sweater?
Hurts, Harper, Kelce, Naurto