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Economics 101: Understanding Money, Fiscal Policy, and Monetary Policy, Quizzes of Economics

An introduction to key economic concepts, including government purchases, fiscal policy multipliers, interest rates, money supply, money demand, functions and types of money, measuring the money supply, and the tools of monetary policy. Learn about the roles of the federal reserve system and its impact on the economy.

Typology: Quizzes

2009/2010

Uploaded on 12/17/2010

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TERM 1
G,T,Yd
DEFINITION 1
G= government purchases of goods and services T= Net
Taxes Yd= Disposable income
TERM 2
Fiscal policy- multipliers
DEFINITION 2
Changes to G or T Expansionary: G increases and/or T
decreases Contractionary: G decreases and/or T increases
The autonomous spending multplier can be used to relate a
change in G to the resulting change in Y
TERM 3
Interest Rates
DEFINITION 3
are determined by the interation of supply and demand for
money.
TERM 4
Money Supply
DEFINITION 4
amount of assets incirculationthat can be used in the form of
money.
TERM 5
Money Demand
DEFINITION 5
amount of wealth people want to hold in form of money.
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TERM 1

G,T,Yd

DEFINITION 1 G= government purchases of goods and services T= Net Taxes Yd= Disposable income TERM 2

Fiscal policy- multipliers

DEFINITION 2 Changes to G or T Expansionary: G increases and/or T decreases Contractionary: G decreases and/or T increases The autonomous spending multplier can be used to relate a change in G to the resulting change in Y TERM 3

Interest Rates

DEFINITION 3 are determined by the interation of supply and demand for money. TERM 4

Money Supply

DEFINITION 4 amount of assets incirculationthat can be used in the form of money. TERM 5

Money Demand

DEFINITION 5 amount of wealth people want to hold in form of money.

TERM 6

Functions of Money

DEFINITION 6

  1. Store of Value 2. Unit of account 3. Medium of exchange TERM 7

Types of Money

DEFINITION 7

  1. Commodity Money- has intrinsic 2. Fiat (token) Money- has little intrinsic TERM 8

Measuring the money supply

DEFINITION 8 M1= currency held outside oof bonds + demand deposits + traveler's checks + other Checkable deposits M2= M1 + money market accounts + small-time deposits TERM 9

Federal Reserve System

DEFINITION 9 central bank conrtol the money supplyand interest rates regulates the banking system Chairman: Ben Bernance TERM 10

Three tools of monetary

policy

DEFINITION 10 1.Required Reserve Ratio- proportion of customer deposits banks are required to keep reserves. 2. Discount rate- rate charged to banks borrowing directly from the feds. 3. Open Market Operations- The trading desk at the NY fed buys/ sells outstanding treasury Bonds from /to the public to change the money supply most commonly used monetray policy tool.