AP-Benefits of Monetary Policy

Multiple Select

Check all that apply: What are the benefits of Monetary Policy?

• 12 year board terms

• Politically isolated

• Neutral

• Slow Response

Multiple Choice

Crowding Out Review: Remitopia is in a recession. Using Expansionary Fiscal Policy (increased govt. spending) what happens to the demand of loanable of funds?

• Increase

• Decrease

• Nothing

Multiple Choice

Crowding Out Review: Remitopia is in a recession. If their demand for loanable funds increases, what happens to interest rates?

• Increase

• Decrease

• Nothing

Multiple Choice

Crowding Out Review: Remitopia is in a recession. If interest rates increase, what happens to Business Investment [I(ir)] and Net Exports [NX(e)]

• Increase

• Decrease

• Nothing

Multiple Select

Check all that apply: Which curves are affected (move) due to Monetary policy.

• MS

• MD

• SLF

• DLF

Multiple Select

Check all that apply: Which components change because of Monetary Policy

• NX(e)

  Net Exports

• I(r)

  Business Investment

• C(y-t)

  Consumer Spending

• G

  Government Spending

Multiple Select

Check all that apply: Which components change because of FISCAL Policy. (either directly or indirectly)

• NX(e)

  Net Exports

• I(r)

  Business Investment

• C(y-t)

  Consumer Spending

• G

  Government Spending

Multiple Select

Which graphs show the result of Expansionary Monetary Policy

Multiple Select

Which graphs show the result of Contractionary Monetary Policy

Multiple Select

Check all that apply: The only issue with monetary policy is....

• Banks might not give loans, even if they have excess reserves

• Political Tensions

• Takes too long

• Banks might keep excess reserves at the FED instead of making loans

Multiple Choice

Practice Money Multiplier: Reserve Requirement is 25%. Laila deposits $100. What is the change to the money supply?

• $300

• $200

• $400

• $100

Multiple Choice

Practice Money Multiplier: Reserve Requirement is 25%. The FED sells $100 in bonds. What is the change to the money supply?

• $400

• $300

• $200

• $100