Reference no: EM13175730
1. Briefly define the following terms:
a. M1
b. FOMC
c. Discount rate
2. Why aren't checks counted as money? Why aren't credit cards counted as money?
3. Describe the Federal Reserve System. Be sure to mention and discuss the Board of Governors, the regional Federal Reserve banks, and the Federal Open Market Committee.
Answer the following multiple-choice questions.
4. A bank's total reserves equal its
a. total cash in its vaults.
b. total cash in its vaults plus its deposits at the Federal Reserve banks.
c. total cash in its vaults plus its total liquid deposits.
d. total cash in its vaults plus its total liquid deposits plus its total deposits at the Federal Reserve banks.
5. The discount rate is the interest rate
a. on time deposits.
b. on funds banks borrow from other banks.
c. on funds that banks borrow from the Federal Reserve.
d. that banks charge their "best" customers.
6. If the amount of currency (that is, Federal Reserve notes) increases and also the reserves of depository institutions increase, the monetary base
a. definitely increases.
b. definitely decreases.
c. definitely does not change.
d. might increase, decrease, or not change depending on the relative sizes of the change in currency and reserves of depository institutions.
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What is the change in equilibrium expenditure
: Suppose the multiplier equals 10.0 and autonomous expenditure decreases by $30 billion. What is the change in equilibrium expenditure?
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What occurs when real gdp exceeds potential gdp
: What is the effect on the aggregate demand curve of the increase in government purchases? What occurs when real GDP exceeds potential GDP? What curve shifts in order to restore real GDP to potential GDP? Why does this curve shift?
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What effect does this have on the current exchange rate
: Suppose the market for dollars is in equilibrium, then the expected future exchange rate rises. What effect does this have on the current exchange rate?
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Determine the effect on the interest rate
: Suppose that the demand for money increases. Using a diagram with a money demand curve and a money supply curve, determine the effect on the interest rate.
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Describe the federal reserve system
: Describe the Federal Reserve System. Be sure to mention and discuss the Board of Governors, the regional Federal Reserve banks, and the Federal Open Market Committee.
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What is distinction between net investment, gross investment
: What is the distinction between net investment and gross investment? Which is the total amount spent on investment in a given year? Which is the change in the capital stock?
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How much did the increase in capital per hour of work
: Suppose that real GDP per hour of work grew by 6 percent last year and the capital per hour of work grew 9 percent. Using the one third rule, by how much did the increase in capital per hour of work increase real GDP per hour of work?
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How does an increase in population affect potential real gdp
: How does an increase in population affect potential real GDP? In your answer, be sure to mention the role played by the labor market.
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Calculate the labor force
: If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the labor force is
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