MACROECON FINAL EXAM 2024/2025 WITH 100%
ACCURATE SOLUTIONS
*Monetary Policy*
define barter - ANSWER✔✔literally trading one good or service for
another
define double coincidence of wants - ANSWER✔✔two people want
some good or service that the other can provide does not allow for future
contracts for purchase if many goods and services
Fiscal policy determines____while monetary policy addresses_____. -
ANSWER✔✔taxes, bank reserve requirements
What are the functions of money? - ANSWER✔✔medium of exchange,
unit of account, store of value
define the functions of money - ANSWER✔✔medium of exchange: acts
as an intermediary between the buyer and the sellerStore of Value: holds
the value over timeUnit of account: the standard by which other values
are measured
Commodity VS Fiat Money - ANSWER✔✔commodity: money that has
value as other things like gold, cigarettes, and riceFiat Money: has no
intrinsic value but is declared by gov. to be legal for use
,define the liquidity of money - ANSWER✔✔how quickly you can
access your money to buy a good or service
define M1 - ANSWER✔✔those monies that are very liquid, like cash,
checkable deposit, traveler's check coins + currency
define M2 - ANSWER✔✔less liquid and includes M1 plus savings and
time deposits, certificates of deposit, money market funds
define debit card - ANSWER✔✔transfer money directly and
immediately from your bank account to the seller = checkable deposit
define credit card - ANSWER✔✔short term loan from a credit card
company
what are some examples of loans? - ANSWER✔✔credit cards,
mortgages, business loans, mortgages, business loans, student loans,
what are banks? - ANSWER✔✔financial intermediary
define the primary loan market - ANSWER✔✔loans made to borrow
define secondary loan market - ANSWER✔✔loans bought and sold by
financial institutions
, how do you find the net worth of a bank? - ANSWER✔✔the total assets
- total liabilities
When the banking system receives new deposits, banks can make new
loans and thus increase the supply of money in circulation:
by an amount less than the new deposits.by an amount equal to the new
deposits.by an amount greater than the new deposits. - ANSWER✔✔by
an amount less than the new deposits.
by an amount equal to the new deposits.
*by an amount greater than the new deposits.*
How do banks create money? - ANSWER✔✔by making loans
Define required reserve ratio - ANSWER✔✔a certain amount of money
that the bank must hold onto
fed consists of - ANSWER✔✔consists of 7 members appointed by the
president, approved by Congress, serve for 14 years, 12 Regional
Federal Reserve District, a board of governors, federal open market
committee
Monetary policy affects economy-wide interest rates by: -
ANSWER✔✔setting the federal funds rate.
conducting open market operations.
changing bank reserve requirements.
ACCURATE SOLUTIONS
*Monetary Policy*
define barter - ANSWER✔✔literally trading one good or service for
another
define double coincidence of wants - ANSWER✔✔two people want
some good or service that the other can provide does not allow for future
contracts for purchase if many goods and services
Fiscal policy determines____while monetary policy addresses_____. -
ANSWER✔✔taxes, bank reserve requirements
What are the functions of money? - ANSWER✔✔medium of exchange,
unit of account, store of value
define the functions of money - ANSWER✔✔medium of exchange: acts
as an intermediary between the buyer and the sellerStore of Value: holds
the value over timeUnit of account: the standard by which other values
are measured
Commodity VS Fiat Money - ANSWER✔✔commodity: money that has
value as other things like gold, cigarettes, and riceFiat Money: has no
intrinsic value but is declared by gov. to be legal for use
,define the liquidity of money - ANSWER✔✔how quickly you can
access your money to buy a good or service
define M1 - ANSWER✔✔those monies that are very liquid, like cash,
checkable deposit, traveler's check coins + currency
define M2 - ANSWER✔✔less liquid and includes M1 plus savings and
time deposits, certificates of deposit, money market funds
define debit card - ANSWER✔✔transfer money directly and
immediately from your bank account to the seller = checkable deposit
define credit card - ANSWER✔✔short term loan from a credit card
company
what are some examples of loans? - ANSWER✔✔credit cards,
mortgages, business loans, mortgages, business loans, student loans,
what are banks? - ANSWER✔✔financial intermediary
define the primary loan market - ANSWER✔✔loans made to borrow
define secondary loan market - ANSWER✔✔loans bought and sold by
financial institutions
, how do you find the net worth of a bank? - ANSWER✔✔the total assets
- total liabilities
When the banking system receives new deposits, banks can make new
loans and thus increase the supply of money in circulation:
by an amount less than the new deposits.by an amount equal to the new
deposits.by an amount greater than the new deposits. - ANSWER✔✔by
an amount less than the new deposits.
by an amount equal to the new deposits.
*by an amount greater than the new deposits.*
How do banks create money? - ANSWER✔✔by making loans
Define required reserve ratio - ANSWER✔✔a certain amount of money
that the bank must hold onto
fed consists of - ANSWER✔✔consists of 7 members appointed by the
president, approved by Congress, serve for 14 years, 12 Regional
Federal Reserve District, a board of governors, federal open market
committee
Monetary policy affects economy-wide interest rates by: -
ANSWER✔✔setting the federal funds rate.
conducting open market operations.
changing bank reserve requirements.
