question
How do you use T accounts to calculate excess and required reserves?
answer
Put deposits in Liabilities then Reserves and Loans in Assets. Reserves = Initial Deposit * Reserve Requirement
question
Change in Checkable Deposits (Checking Accounts) formula
answer
Change in reserves (initial deposit) * 1/reserve requirement
question
Change in Money supply formula
answer
change in checking account deposits - change in currency in circulation
question
What is part of M1?
answer
-Currency in circulation
-Checking Accounts
-Traveler's Checks
-Checking Accounts
-Traveler's Checks
question
What is part of M2?
answer
-M1
-Savings Accounts
-Small denomination certificate of deposits(CDs)
-Money Market Deposit Accounts
-Money Market Fund Shares
-Savings Accounts
-Small denomination certificate of deposits(CDs)
-Money Market Deposit Accounts
-Money Market Fund Shares
question
What are 3 ways the FED can manage the money supply?
answer
1) Buy/Sell Bonds
2) Change the Reserve Requirement
3) Change the Discount Rate
2) Change the Reserve Requirement
3) Change the Discount Rate
question
What are the 4 goals of monetary policy?
answer
1) Price Stability
2) low unemployment
3) Stability of financial markets and institutions
4) Economic Growth
2) low unemployment
3) Stability of financial markets and institutions
4) Economic Growth
question
What is Crowding Out?
answer
a decline in private expenditures as a result of an increase in government purchases
question
What are the two shift factors fir Money Demand?
answer
1) Price Level rises then Demand rises
2) Real GDP rises then Demand rises
2) Real GDP rises then Demand rises
question
What causes movement along the Money Demand Curve?
answer
Interest Rate
question
If Money Supply is higher than Eq how do you adjust to reach Eq?
answer
Raise the price of Bonds
question
When is expansionary fiscal policy used?
answer
During a recession
question
What shifts the SRAS?
answer
change in productivity
change in input prices
change in input prices
question
What are the axis for the Money Graph?
answer
Interest Rate and Quantity
question
What are the axis for the aggregate graph?
answer
Price Level and Real GDP
question
What is expansionary fiscal policy? When is it used? What is the effect on AD curve?
answer
Raising Government Spending or Lowering Taxes
Used during a recession
Aggregate Demand rises
Used during a recession
Aggregate Demand rises
question
What is the spending multiplier?
answer
Change in Eq Real GDP/Change in Spending
or
1/1-MPC
or
1/1-MPC
question
What is change in Eq Real GDP?
answer
Change in Spending * Spending Multiplier
or
Change in Taxes * Tax Multiplier
or
Change in Taxes * Tax Multiplier
question
What is the tax multiplier?
answer
Change in Eq Real GDP/Change in Taxes
or
-MPC/(1-MPC)
or
-MPC/(1-MPC)
question
What is the change in money supply formula?
answer
Change in checking account deposits - Change in currency in circulation
question
What happens to money demanded when interest rates rise?
answer
Money Demanded Falls
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
