AP Macro - Unit 4

What are the axis', curves, and equilibrium points on the Loanable Funds graph?

• The equilibrium point is where the supply curve is flat and the demand curve is vertical.
• The axes are r% (vertical) and Qlf (horizontal); the curves are Slf and Dlf; the equilibrium points are Q1 and r1

• The axes are interest rate (horizontal) and quantity of loanable funds (vertical); the curves are both upward-sloping.
• The axes are price (vertical) and quantity of goods (horizontal); the curves are both downward-sloping.

What is Slf and Dlf, respectively?

• Slf is 'Single Line Format' and Dlf is 'Double Line Format'.
• Slf is 'Supply Loanable Funds' and Dlf is 'Demand Loanable Funds'.

• Slf is 'Single Line Feed' and Dlf is 'Dual Line Feed'.
• Slf is 'Single Line Function' and Dlf is 'Double Line Function'.

What are the axis', curves, and equilibrium points on the Money Market graph?

• Vertical axis: interest rate; Horizontal axis: total expenditure; Curves: Money Supply (horizontal), Money Demand (upward sloping); Equilibrium point: average of Money Supply and Money Demand.
• Vertical axis: inflation rate; Horizontal axis: GDP; Curves: Money Supply (vertical), Money Demand (vertical); Equilibrium point: point where Money Supply equals GDP.
• Vertical axis: i%; Horizontal axis: Qm; Curves: MS(vertical), MD (downward sloping); Equilibrium point: Q1 and i1

• Vertical axis: quantity of money; Horizontal axis: interest rate; Curves: Money Supply (downward sloping), Money Demand (vertical); Equilibrium point: average of Money Supply and Money Demand.

Who supplies loanable funds?

• Non-profit organizations exclusively
• Only large corporations
• Banks

• Government agencies only

Who demands loanable funds?

• Borrowers (C, G, I)

• Consumers (individuals purchasing goods)
• Investors (stockholders and venture capitalists)
• Lenders (banks and financial institutions)

What does the Money Supply and Money Demand directly affect?

• Stock prices and consumer confidence
• Inflation rates and currency value
• GDP

• Government spending and taxation

Who controls monetary policy?

• FED

• Government treasury
• International Monetary Fund
• Commercial banks

What are the 4 monetary policies?

• Deflationary Monetary Policy
• Inflationary Monetary Policy
• Neutral Monetary Policy, GGG, Discount Rate, Stocks

• Open-market Operations, RRR, Federal Funds Rate, Discount Rate

Which one is expansionary and which one is contractionary: buying and selling bonds?

• Buying bonds has no effect; selling bonds is neutral.
• Buying bonds is contractionary; selling bonds is expansionary.
• Both buying and selling bonds are expansionary.
• Buying bonds is expansionary; selling bonds is contractionary.

What market do open-market operations and RRR primarily affect?

• Real estate market
• Bond market
• Money market
• Stock market