M5 Economy

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

What are the three functions of money?

1. Medium of exchange 2. Unit of account 3. Store of Value

today, the RRR is

10%

the federal reserve system divides the country into

12 districts, each with its own federal reserve bank and board

the money multiplier in an economy where the RRR is 25% would equal

4

The development of money led to _______, as it reduced the opportunity costs of exchange.

Agriculture

How do banks create money?

Banks make money when they make loans and then get paid back.

Which of the following refers to a direct exchange of goods and services for other goods and services?

Barter

Monetary policy is used to promote reasonable economic growth, price stability, and full employment by changing the supply of money and credit in an economy.

False

The interest rate charged to banks to borrow from other banks is the _____.

Federal Funds

The interest rate charged to banks to borrow from the Federal Reserve is the _____.

Federal funds

_____ monetary policy seeks to make credit more accessible by lowering interest rates and increasing the amount of money created in the system.

Loose

the most narrow definition of money, which includes only currency and checkable deposits is referred to as

M1

the most frequently used tool to alter the supply of money and credit in the economy is

Open Market Operations [OMO]

the fed was created by the "federal reserve act of 1913" signed into law by

President Woodrow Wilson

When money can be saved and used later for purchases, it is functioning as a _____.

Store of account

How does The Fed influence the money supply?

The Fed influences the money supply by changing the reserve requirements which changes how much money banks can create with their loans.

How can monetary policy be used to promote economic growth, full employment, and price stability?

The monetary policy allows the banks to control the interest rates which in turn effects the economic growth and price stability. Then with price stability and economic growth it allows for a higher chance of full employment.

When money is used to measure the value of goods and services, it is functioning as a _____.

Unit of account

where does the fed's 7 member Board of Governors meet

Washington DC

an example of a "near money" would be

a $5000 certificate of deposit [CD]

Which of the following is NOT a desirable characteristic of money?

attractive

federal reserve notes are...

fiat money, meaning they have value due to government decree

if the supply of money increases, while the quantity of goods/services remains the same, then the price level in an economy would

increase

if the fed wants to fight high levels of inflation, it could

increase the discount rate and/or sell treasury securities

what is the relationship between price level and the value of a dollar

inverse

the Required Reserve Ration [RRR]. set by the Fed

is the amount of reserves banks must hold of each deposit

if the fed wants to increase the amount of money and credit available in the economy

it could lower the discount rate and/or buy treasury securities

during a recession, the fed might engage in

loose monetary policy

when money is used in exchange for goods/services, allowing a society to avoid the inefficiencies of a bartering system, money is functioning as a

medium of exchange

the federal open market committee [FOMC] is primarily responsible for

monetary policy

the process of successive loans and deposits is called

money creation

legal tender

must be accepted as payment for all debts, public or private

When there are signs of an economic slowdown, the FOMC would seek to increase the reserves held in banks by ____ treasury securities.

selling

when you put money aside for future spending, money is functioning as a

store of value

Fiscal policy

the use of government taxing and spending policies to achieve reasonable economic growth, full employment, and stable prices

Monetary policy

the use of tools the federal reserve has to alter the money supply to achieve the same goals as fiscal policy

_____ monetary policy seeks to make credit less available and reduces the amount of money created in the system.

tight

banks create money T/F

true

when price is used to judge the relative value of goods and services, money is functioning as a

unit of account

in the equation of exchange, MV=PQ, V represents the

velocity of money


संबंधित स्टडी सेट्स

Federal Tax COnsiderations for Life Insurance

View Set

Chapter 10,11,12 Child Development

View Set

Chapter 6- Professional Organizations

View Set

PSYCH 1XX3 - Quiz Questions and Answers

View Set

Sociology - Real World - Ch 12: Family Issues

View Set