Macro Study Modules Ch: 11

A sustained decrease in the average level of prices and wages in the economy is ______

Deflation

The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives are called ______

Monetary policy

According to the quantity theory of money, if the Fed engages in an open market purchase of bonds ______ GDP will _________

Nominal , Increase

Credit Carts are

Not part of money supplyThe

The Fed conducts monetary policy primarily through

Open market operations

One of the primary goals of the federal reserve is

Price level stability

Which body of the Federal Reserve System sets the majority of U.S. monetary policy?

The Federal Open Market Committee

How many federal reserve districts are there

12

Who is the chairperson of the Federal Open Market Committee

Board of Governors Chairperson

The board of governors of the federal reserve has ______ members that are appointed for staggered ____ by the ____ and confirmed by the Senate

7, 14 year term, President

if the FOMC decides to increase the money supply, it orders the trading desk at the Federal Reserve Bank of New York to

Buy U.S Treasury Securities

If the Fed decreases the money supply and increases interest rates in order to reduce inflation, it is engaging in,

Contractionary Monetary Policy

The sum of all currency in the hands of the public plus demand deposits and other checkable deposits plus traveler's checks is the official definition of

M1

The sum of all currency in the hands of the public plus demand deposits and other checkable deposits plus traveler's checks is the official definition of:

M1

What are the three functions that money serves in an economy

Medium of exchange, store of value and unit of account

When we say that money serves as a unit of account, we mean that

Prices of goods and services are quoted in terms of money

The theory concerning the link between the money supply and the price level that assumes the velocity of money is constant is called the _______

Quantity Theory of Money

The Federal Reserve System is ______

The central bank of the United States

Velocity is defined as

V = (p x Q) / M

Fiat Money _____

has no intrinsic value

According to the quantity theory of money, the growth rate of money supply equals

the growth rate of nominal GDP