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WorksheetsAP Macroeconomics Unit 5
Total questions: 50
Worksheet time: 50mins
what is the purpose of Monetary Policy?
contribute to economic growth and stability
keep rich people from getting too rich
Functions like Fiscal Policy
give Congress and the political parties more control of the economy
These are IOUs from the U.S. government to people that finance a little piece of the government's debt in exchange for a very small amount of interest
Government Bonds, or Securities
Government Credit
Government Cash
Government Holdings
Fiat money is
money is checking accounts.
money that has intrinsic value on its own.
specially created from the Federal Reserve.
money that is only valuable because the government says it is.
Money loses its value when it
becomes too plentiful
becomes too portabale
is divisible
is durable
____________ is the price paid for the use of money.
Gold
Monetary policy
Fiscal policy
The interest rate
Based on the Required Reserves that Reserve Ratio must be
5%
10%
20%
19%
none of the above
If the reserve requirement is 10%, this bank could create _______ in loans.
$1900
$8100
$900
$9000
not enough information.
If this bank were to purchase securities from the Fed, it could currently purchase _______ in securities.
$810
$1710
$1900
$190
$90
If the reserve requirement is 10%, this bank has _______ in excess reserves
$52
$100
$47
$48
$32
If the reserve requirement is 20%, this bank has _______ in excess reserves
$12
$100
$10
$40
$32
If the reserve requirement is 10%, this bank can increase the money supply by increasing
securities by $20.
loans by $100
loans by $320
securities by $100
loans by $32
This bank has a reserve requirement of
9%
4.5%
10%
20%
7%
The reserve ratio here is....
10%
20%
5%
27%
25%
The reserve requirement at this bank is
10%
80%
20%
5%
15%
This bank can lend
$100
$20
$80
$300
$400
This bank can create up to _______ in the money supply
$100
$20
$80
$300
$400
If $100 is is deposited into this bank the excess reserves will grow to
$100
$20
$80
$120
$40
If $200 is is deposited into this bank the excess reserves will grow to
$100
$260
$180
$120
$160
If the reserve ratio at this bank was lowered to 10%, the required reserves would be
$80
$20
$100
$40
$160
If the reserve ratio at this bank was lowered to 10%, this bank could create up to _____ in the money supply.
$800
$200
$600
$400
$1600
If this bank sold $100 in Securities it's ________ would rise to _____ and its Demand Deposits would ______.
Securities; $200; remain the same
Reserves; 140; remain the same
Loans; $180; increase by $100
Securities; $200; increase by $100
Reserves; $140; increase by $100
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.
The shift in the graph could be caused by
a recession.
government deficit spending.
an increase in savings.
positive feelings about the future of the economy.
the Fed selling securities in an open market operation.
A movement from D3 to D2 could be caused by
an increase in personal wealth.
an increase in the money supply.
a negative view of the future of the economy.
a decrease in household savings.
a government budget surplus.
The shift on the graph could be caused by
a lowering of default risk on loans.
an increase in the desire of companies to invest.
positive expectations about the future of the economy.
a government budget deficit.
a decrease in household savings.
The shift in the graph could be caused by
the crowding out effect.
positive expectations about the future of the economy.
an increase in government budget deficit spending.
a decrease in consumer wealth.
a decrease in household savings.
The shift in the graph could be caused by
an decrease in the federal funds rate.
a lowering of the discount rate.
a government budget surplus.
a decrease in household savings.
an increase in positive opinions on the economic future.
The shift in the graph could be caused by
the Federal Reserve increases the discount rate.
the Federal Reserve makes an open market sale of securities (bonds).
the government increases spending without a corresponding increase in taxes.
the Federal Reserve makes an open market purchase of securities (bonds).
