Exam 3

_____________________ monetary policy is sometimes called “loose” or
“easy” monetary policy.

• Contractionary
• Tight
• Restrictive
• Expansionary

_____________________ monetary policy is sometimes called “tight” monetary policy.

• Expansionary
• Loose
• Stimulative
• Contractionary

FOMC orders an contractionary policy --> The money supply _________ and interest rates ____ --> Investment, consumption, and net exports all _________ --> The AD curve shifts to the ____ --> Real GDP and the price level ____

FOMC orders an expansionary policy --> The money supply _________ and interest rates ____ --> Investment, consumption, and net exports all _________ --> The AD curve shifts to the ____ --> Real GDP and the price level ____

The four functions of money?

• Standard of deferred payment, store of value, unit of exchange, and measure of account
• Medium of exchange, unit of account, store of value, and standard of deferred payment
• Unit of account, medium of exchange, store of wealth, and standard of value
• Measure of value, standard of deferred payment, medium of exchange, and store of wealth

Define Medium of exchange.

• A medium of exchange is a type of currency used only in online transactions.
• A medium of exchange is a tool used for gardening purposes.
• Money is acceptable to a wide variety of parties as a form of
  payment for goods and services.

• A medium of exchange is a form of communication between animals.

Define Unit of Account.

• Money allows a way of measuring value in a standard manner

• Geographical location of a business
• Historical record of transactions
• Physical weight of an item

Define Store of Value.

• Money allows people to defer consumption till a later date by
  storing value. Other assets can do this too, but money does it
  particularly well because it is liquid, easily exchanged for goods

• A financial instrument used for investment purposes
• An item that loses value over time
• A type of currency that fluctuates in value

Define Standard of Deferred Payment.

• Payment made in advance for goods or services received in the future.
• An agreement to pay for goods or services immediately upon receipt.
• Agreed-upon terms for payment in the future for goods or services received currently.
• A method of payment involving bartering goods or services.

List the five characteristics that make something a good medium of exchange

• The good must be acceptable to most people.

• It should be of standardized quality so any two units are
  alike.

• It should be durable so that value is not lost by storage.

• It should be valuable relative to its weight, so that it can easily
  be transported even in large quantities.

• It should be divisible because different goods are valued
  differently.