The statement of assets and liabilities of the central bank.
Central Bank's Balance sheet
100
True or False: The Federal Open Market Committee (FOMC) sets the target federal funds rate:
True
100
What is the average number of times each unit of money is used per unit of time?
Velocity of money
100
What does LRAS, stand for?
Long-Run Aggregate Supply Curve
100
Primary assets of most central banks
Securities
200
The monetary base can only be destroyed and created by?
The Federal Reserves
200
Federal funds loans are:
Unsecured loans
200
What is the theory that changes in nominal income are determined by changes in the quantity of money?
Quantity theory of money
200
What is Expansionary Output Gap?
When current output pushes climbs above potential output.
200
Interest rate charged on overnight loans between banks
Target Federal Funds Rate
300
What are the three primary assets on a central bank's balance sheet?
- securities
-foreign exchange reserves
-loans
300
If the market federal funds rate were below the target rate, the response from the Fed would likely be to:
Sell U.S. Treasury securities
300
The price of money is determined by:
A) Congress in the United States
B) The demand and supply for money
C) The unemployment rate
D) Fiscal policy
B) The demand and supply for money
300
What is Output Gap?
When current output pushes away potential output
300
The demand for money based on the use of money as a means of payment, for transactions purposes
What is transactions demand for money
400
A loan from the Federal Reserve, usually to a commercial bank.
Discount loans
400
The primary policy instrument of the Federal Open Market Committee (FOMC) is:
The target federal funds rate
400
The equation of exchange tells us that:
A) Money growth minus velocity growth equals inflation minus real growth
B) Money growth plus inflation equals velocity growth plus real growth
C) Money growth plus velocity growth equals inflation plus real growth
D) Inflation minus money growth equals real growth plus velocity
C) Money growth plus velocity growth equals inflation plus real growth
400
The level of output given exiting technology and normal use of resources.
What is Potential Output?
400
Depending how much money we hold depends on _______ and _________
a. opportunity cost; benefit
b. costs; benefits
c. costs; interest rates
d.inflation; benefits
costs; benefits
500
In the United States, foreign exchange reserves are composed of?
Foreign currency held by the Fed
500
The Fed will make a discount loan to a bank during a crisis only if:
The bank is financially sound and can provide collateral for the loan
500
The number of times a dollar is spent over some time period is called ___________; when dollars are spent more frequently _________.
A) reserve turnover; reserve turnover falls
B) the velocity of money; velocity falls
C) reserve turnover; reserve turnover rises
D) the velocity of money; velocity rises
D) the velocity of money; velocity rises
500
What is the four parts of aggregate expenditure?
Consumption, Investment, Government Purchases, Net Exports
500
Policy makers know that money growth is an important ___________ for tracking long-run inflation trends