AP Macro Graph Practice Money Market

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 money supply curve is

• Upward sloping
• Downward sloping
• Horizontal
• Vertical

What is the multiplier if the reserve requirement is 25%?

• 4
• 5
• 40
• .4

In the US, the dollar is

• backed by gold
• backed by gold and silver
• commodity money
• fiat money