Macro Unit 4 Test

higher unexpected inflation

• borrowers better off

• borrowers worse off

unexpected inflation causes real rate of return on an asset to ​​ (a)   and real value of assets to ​ (b)  

• fall
• rise

fisher equation

• nominal= real + inflation rate

• nominal = real - inflation rate

Match the following

• bank reserves + currency

• M2

• larger liquid assets + larger time deposits

• MB

• savings accounts + short term certificates of deposits +money market accounts

• M3

• currency & coins in circulation + checkable deposits + travelers checks

• M1

total potential chnage to money supply is calculated by multiplying the ​ (a)   by the ​ (b)  

• money multiplier
• excess reserves
• reserve requirments
• money supply

in the money market, supply is independent of the ​ (a)  

• nominal interest rate
• real interest rate
• quantity of money demanded

Nominal interest rates is the PL in the money market because it is the ​​ (a)   of holding money

• opportunity cost
• supply
• demand
• inflation rate

Match the following DETERMINANTS OF MONEY

• if banks become unstable, demand for money will increase

• chnages in technology

• causes an increase in th demand fore money because people need more money to buy things

• changes in wealth/income

• people with more wealth/income hold more cash and keep more money in their checking accounts

• chnages in institutions

• advances decrease the demand for money because it is easier to get

• change in aggregate PL

expansionary monetary policy shifts the Money Supply to the ​ (a)  

• right
• left

influencesthe availability and cost of money and credit to acheive economic goals