Money Market

What is the money market used for?

• To determine inflation.

• To create less scarcity.

• To illustrate changes in the nominal interest rate.

• To illustrate how fiscal policy changes spending.

Selling bonds

• contractionary open market operations

• expansionary fiscal policy

• expansionary monetary policy

• increase RGDP

• decrease RGDP

Increase in government spending

• contractionary open market operations

• expansionary fiscal policy

• expansionary monetary policy

• increase RGDP

• decrease RGDP

Decreasing the reserve requirement

• contractionary open market operations

• expansionary fiscal policy

• expansionary monetary policy

• increase RGDP

• decrease RGDP

Increasing the discount rate will...

• contractionary open market operations

• expansionary fiscal policy

• expansionary monetary policy

• increase RGDP

• decrease RGDP

Buying bonds will...

• contractionary open market operations

• expansionary fiscal policy

• expansionary monetary policy

• increase RGDP

• decrease RGDP

_____ bonds will help reduce high unemployment.

Draw a graph of the money market and the impact high inflation will have on the nominal interest rate.

Margie saves $100 a week. Which function of money is Margie using?

• medium of exchange

• store of value

• standard of value

Ronald was weighing his options on whether or not to buy new shoes or go out to a nice dinner with friends. Which function of money is Ronald using?

• medium of exchange

• store of value

• standard of value