This is how easily assets get converted to money.

This happens to aggregate demand when expansionary policy is used.

Contractionary policy is used when the economy is in _____

The amount of money each bank is required to save, it’s usually 10%

Under a fractional reserve banking system, banks are required to

a.keep part of their demand deposits as reserves
b.expand the money supply when requested by the central bank
c.insure their deposits against losses and bank runs

This is cash+coins+checking deposits+travelers checks

This happens to unemployment when expansionary policy is used.

This is the open market operation used in contractionary policy.

This is the word for selling/buying bonds to manipulate MS

When the Federal Reserve buys government securities on the open market, which of the following will decrease in the short run?

a.Interest rates
b.Taxes
c.The amount of money loaned by banks

This is a certification of indebtedness

This is the policy that banks like better.

In contractionary policy, Ig ____ (inc/dec), AD _____ (inc/dec), and strength of $ ____(inc/dec)

The most important monetary control mechanism

If a commercial bank has no excess reserves and the reserve requirement is 10 percent, what is the value of new loans this single bank can issue if a new customer deposits $10,000?

a.$100,000
b.$9,000
c.$10,000

These are the functions of money

This happens to real interest rates when Expansionary is used.

A side effect of contractionary policy is ___

Reducing the Required reserve ratio is used for _______ monetary policy.

If the Federal Reserve institutes a policy to reduce inflation, which of the following is most likely to increase?

a.Investment
b.Government spending
c.Interest rates

The money supply increases resulting in this in the money market

Americans buy this good when Expansionary policy is used.

Unemployment does this with contractionary policy because GDP decreases.

The economy is experiencing a sharp and prolonged inflationary trend. What changes in (1) the reserve ratio, (2) the discount rate, and (3) open-market operations would you recommend?

The federal funds rate is the interest rate that

a.The Federal Reserve charges the federal government on its loans
b.Banks charge one another for short-term loans
c.Banks charge their best customers