Money and Banking Pts. The FED Money Demand Money Supply Money Functions Monetary Policy

5 Points Authority to appoint the Federal reserve Chair?

That’s right! Who is the President?

5 Points The type of demand needed to purchase goods and services in the economy.

That’s right! What is transactional demand?

5 Points Currency is a part of M1, M2 and/or M3. Which one or combination?

That’s right! All three?

5 Points The three primary tools the FED has to increase or decrease the money supply..

That’s right! Open market operations Discount rate Required reserve ratio

5 Points The type of function money serves when you purchase a new car.

That’s right! Medium of Exchange

10 Points Current FED Chair

That’s right! Who is Ben Bernanke ?

10 Points This type of demand for money varies inversely with interest rates.

That’s right! What is asset demand?

10 Points The position of the money supply curve.

That’s right! What is Vertical?

10 Points When you put money into a savings account you are using money as this.

That’s right! What is a store of value?

10 Points The FED should do this in its open market operations if it wants to get us out of a recession.

That’s right! What is buy bonds?

15 Points How many federal reserve banks there are in the U.S.

That’s right! What is 12?

15 Points If NGDP increased we would expect this to happen to the money demand curve.

That’s right! What is shift right?

15 Points The more common name for demand deposits.

That’s right! What are checking accounts?

15 Points When you are a contestant on the price is right and you are guessing the value of a can of peas you are using money as this.

That’s right! What is a unit of account?

15 Points The impact an easy monetary policy has on Investment spending.

That’s right! What is increases it?

20 Points The primary committee responsible for buying and selling government securities.

That’s right! What is the federal open market committee?

20 Points If the government decrease spending on public works projects we would expect this to happen to the money demand curve.

That’s right! What is shift left?

20 Points The type of money that is easily convertible into M1.

That’s right! What is near monies?

20 Points The term that describes money that is not backed by gold or silver but backed by the faith of the U.S. government and its citizens.

That’s right! What is Fiat Money?

20 Points The impact of a tight monetary policy on Aggregate Demand.

That’s right! What is shift it to the left?

25 Points The committee that is in charge of setting the Discount rate and the Required Reserve Ratio.

That’s right! What is the Board of Governors?

25 Points The type of relationship fiscal policy and money demand have.

That’s right! What is direct?

25 Points Which of the following are NOT a part of M2: Cash, Currency, savings accounts, stocks, credit cards. HINT there is more than one answer.

That’s right! What are stocks and credit cards?

25 Points The official name of paper currency as it is printed.

That’s right! What are Federal Reserve Notes?

25 Points The appropriate monetary policy response to fiscal crowding out.

That’s right! What is increase the money supply? Click here for final Jeopardy

Final Jeopardy The final Jeopardy Question is :

1.Describe the sequence of an easy monetary policy. What are its effects on i-rates, Investment, AD, and RGDP. Additionally, what is the canceling potential and the effect on net exports?

DmDm Investment Demand Monetary Policy and Equilibrium GDP AD 1 AD 2 AD 3 S m1 AS P1P1 S m2 P2P2 S m3 P3P3 Price level Real rate of interest, i Real domestic output, GDP Quantity of money demanded and suppliedAmount of planned investment, I RiRRiR MEI Long Run Effects: 1.Increased planned investment will lead to increased AS 2. i down = international $ down, X up 3. Canceling effect: AD up, MD up, i up, and I down, = AD down