AP Macro Graph Practice I: Money Market and Loanable Funds

This shift could occur with

• an increase in bank lending.

• the purchase of securities in the open market by the Fed.

• a decrease in the discount rate.

• an increase in the Federal Funds rate.

• a decrease in the reserve ratio.

This shift could be caused by

• an increase in government spending.

• a decrease in deficit spending.

• an increase in the discount rate.

• the net export effect.

• a decrease in the discount rate.

A shift from MD1 to MD2 could be caused by

• customers wishing to hold more cash and use credit cards less.

• a decrease in the discount rate.

• an open market operation sale of bonds to the Fed.

• the GDP falling.

• an open market operation purchase of bonds by the Fed.

To decrease the equilibrium interest rate to 8% the Fed could

• sell bonds.

• raise the discount rate.

• raise the Federal Funds rate.

• lower the reserve requirement.

• decrease the GDP.

To raise the interest rate to 12% the Fed could

• buy bonds.

• increase the discount rate.

• decrease the reserve ratio.

• decrease the nominal interest rate.

• decrease the Federal Funds rate.

This shift could have been caused by

• an increase in the discount rate.

• people wanting to hold more money.

• increase in GDP.

• decrease in credit card fees.

• the Fed sells bonds.

A decrease in the money supply to MS2 would cause

• the nominal interest rate to rise to .8

• the nominal interest rate to remain the same

• the quantity of money to rise to 500

• the nominal interest rate to fall to 0.25

• a fixed quantity of money.

The shift in the graph could be caused by

• a recession.

• government deficit spending.

• an increase in savings.

• positive feelings about the future of the economy.

• the Fed selling securities in an open market operation.

The shift in the graph could be caused by

• an increase in the Federal Funds Rate.

• the government running a budget deficit.

• poor expectations of the future of the economy.

• an increase in household savings.

• a lowering of default risk.

A movement from D3 to D2 could be caused by

• an increase in personal wealth.

• an increase in the money supply.

• a negative view of the future of the economy.

• a decrease in household savings.

• a government budget surplus.