AP Macroeconomics Unit 5

When the government spends more money than they take in each year is called a _________?

• Debt
• Deficit
• Surplus
• Expansionary

"The Fed" refers to the....

• Federal Bureau of Investigation
• Federal Government
• Federal Reserve System
• Federal Income Tax

what is the purpose of Monetary Policy?

• contribute to economic growth and stability

• keep rich people from getting too rich

• Functions like Fiscal Policy

• give Congress and the political parties more control of the economy

These are IOUs from the U.S. government to people that finance a little piece of the government's debt in exchange for a very small amount of interest

• Government Bonds, or Securities

• Government Credit

• Government Cash

• Government Holdings

The primary role of the Federal Reserve Bank is to steer the economy by

• controlling the budget
• setting spending levels.
• controlling the money supply.
• loaning out money.

Cash that banks must keep in the vault.

• excess reserves
• fiscal policy
• required reserves
• crowding out effect

The exchange of goods and services without using money is known as...

• near money.
• bartering.
• double coincidence of wants. 
• fiat money.

Which of the following would the FED us to increase the money supply?

• raise the discount rate
• raise the required reserves
• buy bonds/securities
• print more money

Fiat money is

• money is checking accounts.

• money that has intrinsic value on its own.

• specially created from the Federal Reserve.

• money that is only valuable because the government says it is.

If the Federal Reserve wanted to stimulate the economy (make it grow), they might

• Sell Treasury bonds
• Buy Treasury bonds
• Spend more money
• Spend less money