Monetary Policy Flashcard

Front

What is the primary goal of monetary policy?

Back

To achieve macroeconomic objectives such as price stability, full employment, and stable economic growth

Front

Which of the following is NOT a tool of monetary policy? Open Market Operations, Discount Rate, Reserve Requirements, Fiscal Spending

Back

Fiscal Spending

Front

What does expansionary monetary policy aim to do?

Back

Increase the money supply and lower interest rates

Front

What is the effect of higher income levels on money demand?

Back

It increases money demand

Front

What happens to money demand when interest rates are lowered?

Back

It increases because investment spending is more attractive.

Front

What is the definition of Money Supply?

Back

The total amount of money in circulation within an economy.

Front

Which components are included in M1? Options: Currency in circulation, demand deposits, and checkable deposits.; Savings deposits, small time deposits, and money market mutual funds.; Currency in circulation, savings deposits, and loans.; Demand deposits, loans, and money market mutual funds.

Back

Currency in circulation, demand deposits, and checkable deposits.

Front

What does M2 include in addition to M1?

Back

Savings deposits, small time deposits, and money market mutual funds.

Front

How is the equilibrium interest rate in the Money Market determined?

Back

By the intersection of the money demand curve and the money supply curve.

Front

Who are considered savers in the Loanable Funds Market?

Back

Individuals, businesses, and governments that have excess funds to save or invest.