24) For events a and b, draw a graph of the money market, an AD/AS graph, a bond

Question

24) For events a and b, draw a graph of the money market, an AD/AS graph, a bond graph and a graph of the market for foreign exchange Complete the table on the answer sheet by filling in decrease, incroase, appreciate, depreciafe or no change a) The Fed sells bonds in the open market b) The govemment increases spending on defonse. 25) Match the following terms and definitions ) the amount of money a bank is able to loan out a) federal funds rate b) mpc c) capital d) dscount rate e) crowding out the total amount of money the govenment owos ) the decrease Investment due to expansionary fiscal policy v) the percentage of deposits a bank is required to keep hand v) the interest rate banks charge each other i) exchange rates adjust based on price difterences productivity g) reserve requirement ratio vi) the additional spending due to an increase in income h) excess roserves vi) biggest component of GDP b) the interest rate the Fed charges member bank federal debt D expansionary fiscal policy x) plant, equipment, machinery k) consumption 0 purchasing power parity xi) an increase in government spending or a tax cut xi) output per unit of labor 20) a) Suppose there is a decrease in consumer confidence. lustrate this in the ADIAS graph. b) Explain the effects on the bond market and illustrate this in a bond market graph.

Explanation / Answer

Ans 25.

a Federal fund rate -9 Interest rate that Fed charges from its member banks

b MPC - 7 additional spending due to increase in income

c Capital -10 plant , equipment and machinery

d Discount rate -5 Interest rate that bank charges each other

e crowding out- 3 Decrease in inv due to expansiomnary fiscal policy

f productivity -11 Output per unit of labour

g reserve requirement ratio -4 % of deposits banks are required to keep in hand

h excess reserves - 1 The amount of money bank is able to loan out

i Federal debt - 2 The total amount of money the government owes

j Expansionary fiscal policy - 12 Increase in Government spending or tax cut

k Consumption -8 Biggest component of GDP

l Purchasing power parity - 6 Exchange rates adjust on the basis of price differences

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.