Econ Quiz 5

Front 1

Tax on interest=

Back 1

nominal interest rate = real interest rate + inflation

Front 2

Money demand

Back 2

Stockpile (what you have in your wallet)

Front 3

If prices go up

Back 3

MD goes up

Front 4

If real GDP goes up

Back 4

MD goes up

Front 5

If Technology goes up

Back 5

MD goes down

Front 6

Bonds

Back 6

alternative to money that earns interest

Front 7

relationship between MD and interest

Back 7

negative

Front 8

change in interest changes

Back 8

quantity of Md

Front 9

If i rates make Ms less than Md

Back 9

public sells bonds, bid prices fall, yeilds go up

Front 10

of i rates make Ms more than Md

Back 10

public buys bonds, bids go up, yeilds go down

Front 11

Tax on interest=

Back 11

nominal interest rate = real interest rate + inflation

Front 12

Money demand

Back 12

Stockpile (what you have in your wallet)

Front 13

If prices go up

Back 13

MD goes up

Front 14

If real GDP goes up

Back 14

MD goes up

Front 15

If Technology goes up

Back 15

MD goes down

Front 16

Quantity Theory of Money

Back 16

MV = PY

Front 17

Percentage change equation

Back 17

%M + %V = %P + %Y

Front 18

Increase in MS

Back 18

people hold less money,buy bonds. The price of a bond rises and the interest rate falls

Front 19

Increase in Credit Card use

Back 19

decrease in MD

Front 20

Spread of use of ATMs

Back 20

Increase in MD

Front 21

Fed decreases quantity of $ Short run-

Back 21

quantity of $ demanded decreases & real and nominal interest rates rise

Front 22

Fed decreases quantity of $ Long Run-

Back 22

MD decreases as price level falls, real interest rate returns to normal level

Front 23

Fed conducts open market securities- short run

Back 23

nominal interest rate falls,

Front 24

Fed conducts open market securities long run-

Back 24

nominal interest rate returns to initial level

Front 25

Inflation Rate =

Back 25

Money growth + Velocity growth – Real GDP growth

Front 26

inflation rate

Back 26

(nominal interest rate – real interest rate)

Front 27

Nominal Interest Rate =

Back 27

Real Interest Rate + Inflation Rate

Front 28

Velocity of Circulation (V) =

Back 28

Nominal GDP (P x Y) / Quantity of Money (M)

Front 29

M =

Back 29

(P x Y) / V

Front 30

Nominal GDP =

Back 30

Real GDP (Y) x Price level (P)

Front 31

P =

Back 31

M x V / Y

Front 32

Real GDP =

Back 32

Money growth + Velocity Growth – Inflation rate

Front 33

Real Interest Rate =

Back 33

Nominal Interest Rate – Inflation Rate

Front 34

Velocity growth =

Back 34

Inflation rate + Real GDP growth –Money Growth

Front 35

Money growth =

Back 35

Inflation rate + Real GDP growth – Velocity growth

Front 36

Nominal GDP growth =

Back 36

growth rate of real GDP + Inflation rate

Front 37

Velocity of circulation decreases when

Back 37

– growth rate of quantity of money is greater than growth rate of RGDP

Front 38

Short run –

Back 38

nominal interest rate adjusts to achieve money market equilibrium

Front 39

Long Run-

Back 39

price level adjusts to achieve money market equilibrium

Front 40

Quantity Theory of Money-

Back 40

When real GDP equals potential GDP, an increase in the quantity of money brings an equal percentage increase in the price level.