Week 5- Monetary system problem set Flashcards Preview

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Flashcards in Week 5- Monetary system problem set Deck (27):
1

Ben Bernanke appointed___

Chair of the Board of Governor in 2009 by President Obama.

2

Federal Reserve responsible for___

regulating money supply in the US.

3

What do you call a Common function of most other financial assets?

store of value.

4

ALL items that are included in M1 are also___

included in M2.

5

Discount rate are___

interest rate that the Fed charges banks that borrow reserves from it.

6

Increasing the gov’t budget deficit is not a tool for___

monetary policy.

7

When Fed conducts open-market sales it sells___

Treasury securities which decreases money supply.

8

Fed sells gov’t bonds, and in so doing___

decreases money supply.

9

Fed buys gov’t bonds from___

the public.

10

When Fed conducts open-market purchases it buys___

Treasury securities, which increases the money supply.

11

The Most liquidity: highest to lowest___

currency, stocks, fine art.

12

Liquidity refers to___

the ease with which an asset is converted to the medium exchange.

13

IF discount rate lowered, banks borrow___

more from Fed so reserves increase.

14

In fractional-reserve banking system, bank keeps___

only a fraction of its deposit in reserve. Banks generally lend out a majority of the funds deposited.

15

Credit cards not included in___

M1.

16

There’s a short-run trade-off btwn___

inflation and unemployment.

17

Demand deposits are a type of___

checking account.

18

Fed has power to increase or decrease number of dollars in the economy through___

FOMC

19

In recent years, Federal Open Market Committee focused on a target for___

federal funds rate.

20

Federal funds rate is the interest rate___

banks charge each other for short-term loans.

21

Prisoners sometimes determine a single goods to be used as money. The good___

becomes a medium of exchange and a unit of account.

22

Voting members of Federal Open Market Committee includes: 5, president of, and 7___

• 5 presidents of regional Federal Reserve banks.

• President of the Federal Reserve Bank of New York.

• 7 Board of Governors.

23

When bank loans out $1,000, the money supply___

increases.

24

M1 consist of___

currency + checkable deposits.

25

Federal Reserve note are___

nation’s currency in paper money.

26

M2 are highly___

liquid assets. They do not function as medium of exchange but can be converted into currency.

M2= M1 + near monies.

27

Money zero maturity___

monetary balances that are immediately available at 0 cost.