Macroeconomics Final Review: Redemption (3/4/2014 Homework)

Front 1

Who handles the printing of paper currency

Back 1

The Treasury Department

Front 2

Does the Fed engage in monetary policy?

Back 2

Yes

Front 3

Who handles fiscal policy?

Back 3

President and Congress

Front 4

Who manages the U.S. money supply?

Back 4

The Federal Reserve

Front 5

Who manages processing checks?

Back 5

The Federal Reserve

Front 6

Who makes sure banks comply with consumer protection laws?

Back 6

The Federal Reserve

Front 7

The Federal Reserve engages in what type of policy?

Back 7

Monetary Policy

Front 8

What are the tasks of the Federal Reserve

Back 8

managing the US money supply, processing checks, making sure banks comply with consumer protection laws, engaging in monetary policy

Front 9

What are the ways that governments can increase or decrease the money supply?

Back 9

open market operations, reserve requirement, discount rate, quantitative easing

Front 10

Policy Tool for Opening Market Operations

Back 10

A central bank purchasing existing bonds

Front 11

Policy Tool for Reserve Requirement

Back 11

An increase in the percentage of deposits that banks must keep on hand

Front 12

Policy Tool for Discount Rate

Back 12

An increase in the interest rate that a central bank charges commercial banks for loans

Front 13

Policy Tool for Quantitative Easing

Back 13

A central bank purchasing a large quantity of longer-term Treasury bonds

Front 14

Expansionary monetary policy encourages spending but also....

Back 14

increases the aggregate price level

Front 15

When a rising aggregate price level is a concern but GDP is growing at an acceptable rate, what is an appropriate policy to undertake?

Back 15

Contractionary monetary policy

Front 16

When inflation is occurring and GDP is not growing at an acceptable rate, what is an appropriate policy to undertake?

Back 16

It's unclear what type of monetary policy

Front 17

Contractionary monetary policy will cause interest rates to....?

Back 17

increase

Front 18

Loanable Funds Market

Back 18

hypothetical market that brings savers and borrowers together, also bringing together the money available in commercial banks and lending institutions available for firms and households to finance expenditures, either investments or consumption

Front 19

Reserve Ratio

Back 19

The portion (expressed as a percent) of depositors' balances banks must have on hand as cash.

Front 20

Who issues the requirement for the reserve ratio

Back 20

determined by the country's central bank, in US, the Federal Reserve

Front 21

The reserve ratio affects the....?

Back 21

money supply in a country

Front 22

Open Market Operation (OMO) is...?

Back 22

an activity by a central bank to buy or sell government bonds on the open market

Front 23

The usual aim of open market operations is to....?

Back 23

manipulate the short term interest rate and the supply of base money in an economy, and thus indirectly control the total money supply (expand or contract)

Front 24

What describes the policies that will cause aggregate demand to shift to the right?

Back 24

a. A central bank uses open market operations to conduct expansionary monetary policy. b.) An increase in the money supply. c.) The Federal Resrve buys bonds from private banks. d.) A decrease in the discount rate

Front 25

What describes the policies that will cause aggregate demand to shift to the left

Back 25

a.) A central bank sell bonds on the open market. b.) An increase in the required reserve ratio

Front 26

If a central bank uses open market operations to conduct expansionary monetary policy how will that affect the aggregate demand curve?

Back 26

There will be a shift to the right

Front 27

If there is an increase in the money supply, how will that affect the aggregate demand curve?

Back 27

There will be a shift to the right

Front 28

If the Federal Reserve buys bonds from private banks, how will that affect the aggregate demand curve?

Back 28

There will be a shift to the right

Front 29

If there is a decrease in the discount rate, how will that affect the aggregate demand curve?

Back 29

There will be a shift to the right

Front 30

If the central bank sells bonds on the open market, how will that affect the aggregate demand curve?

Back 30

It will shift to the left

Front 31

If there is an increase in the required reserve ratio, how will that affect the aggregate demand curve?

Back 31

It will shift to the left

Front 32

If there is use of the expansionary demand policy, how will the aggregate demand curve shift?

Back 32

There will be a shift to the right

Front 33

If the Federal Reserve purchases bonds on the open market, how will this affect the aggregate demand curve?

Back 33

There will be a shift to the right

Front 34

Methods the Fed uses to affect the money supply

Back 34

a.) buying and selling bonds on the open market. b.) changing the reserve requirements for banks. c.) quantitative easing. d.) changing the interest rate charged in loans to banks

Front 35

If the Federal Reserve uses Open Market Operations to increase the interest rate, how will this affect the aggregate demand?

Back 35

There will be a shift to the right

Front 36

In Open Market Operations, what happens to real output in response to the increase in the interest rate change?

Back 36

It decreases

Front 37

A bank run is when..?

Back 37

Too many of a banks customers make withdrawals at once

Front 38

Bank runs are only problematic with...?

Back 38

fractional reserve banking systems

Front 39

An example of an institution that decreases the frequency of bank runs

Back 39

FDIC

Front 40

Lender of Last Resort

Back 40

one of the roles of the central bank, to provide loans to distressed financial institutions

Front 41

Deposit Insurance

Back 41

one of the roles of central bank is to foster confidence in the banking system by making sure that all people can retrieve their money even if a bank goes bankrupt

Front 42

Expansionary monetary policy

Back 42

intended to stimulate the economy

Front 43

Contractionary Policy

Back 43

meant to slow down the economy

Front 44

The federal reserve purchasing bonds on the open market is an example of what type of policy?

Back 44

Expansionary Monetary Policy

Front 45

A decrease in the discount rate is an example of what type of policy?

Back 45

Expansionary Monetary Policy

Front 46

A Central bank reducing the rate of interest that it charges to commercial banks on loans is an example of what type of policy?

Back 46

Expansionary Monetary Policy

Front 47

The Federal Reserve selling bonds to the open market is an example of what type of policy?

Back 47

Contractionary Monetary Policy

Front 48

A central bank increasing percentage of deposits that banks are required to keep in vaults is an example of what type of policy?

Back 48

Contractionary Monetary Policy