Macroeconomics Ch. 14 & 15

Refer to figure 15-6. In the dynamic model of AD-AS in the figure above, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in:

The interest rate that banks charge other banks for overnight loans is the:

Contractionary monetary policy on the part of the Fed results in:

Expansionary monetary policy to prevent real GDP from falling below potential GDP would cause the inflation rate to be relatively (blank) and real GDP to be relatively (blank).

When housing prices fell as they did beginning in 2006 following the housing market bubble, most banks and other lenders (blank) the requirement for borrowers, making it (blank) for potential home buyers to obtain mortgages.

The quantity theory of money was derived from the quantity equation by asserting that:

Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. As a result of Kristy's deposit, Bank A's excess reserves increase by:

The largest liability on the balance sheet of most banks is its:

If households choose to take some fraction of each check they deposit and hold it as currency, then the simple deposit multiplier (blank) the real-world multiplier.

Refer to Table 14-1. Suppose a transaction changes a bank's balance sheet as indicated in the T-account, and the required reserve ratio is 10 percent. As a result of the transaction, the bank has excess reserves of:

The Federal Reserve's narrowest definition of the money supply is:

Which of the following information about fiat money is FALSE? Fiat money:

Open market operations refer to the purchase or sale of (blank) to control the money supply.

Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 12 percent, the the bank will now have excess reserves of

Economies where goods and services are traded directly for other goods and services are called (blank) economies.

Refer to Scenario 14-1. M2 in this simple economy equals

Refer to Figure 15-5. Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy. Using the static AD-AS model in the figure above, this would be depicted as a movement from:

Refer to Figure 15-5. Suppose the Fed sells Treasury Bills in pursuit of contractionary monetary policy. Using the static AD-AS model in the figure above, this situation would be depicted as a movement from:

Refer to Figure 15-5. Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising. Using the static AD-AS model in the figure above, the correct Fed policy for this situation would be depicted as a movement from: