Monetary Class Notes

Question 1

Too much money leads to _________ and too little money leads to ___________.

Answer 1

Inflation

Unemployment

Question 2

M1 money is just over how much in our economy?

Answer 2

$3 trillion

Question 3

The M1 money is considered the what?

Answer 3

The liquidity

Question 4

Money has to grow as fast as the GDP or it will _______ _________ the growth path of GDP.

Answer 4

Pull down

Question 5

What populist argued we could back the money by silver and gold?

Answer 5

William Jennings Bryant

Question 6

What children’s movie was an economic allegory representing the gold standard?

Answer 6

Wizard of Oz

Question 7

When the country was first formed what two people argued about monetary policy?

Answer 7

Hamilton and Jefferson

Question 8

Hamilton argues for what kind of bank?

Answer 8

Centralized bank

Question 9

Jefferson argues for what kind of bank?

Answer 9

Decentralized bank

Question 10

When was the National Banking Act passed creating a centralized bank?

Answer 10

1863

Question 11

What problem did the first National Banking Act have?

Answer 11

Geographic problems

Question 12

When was the Federal Reserve Act?

Answer 12

1913

Question 13

How many district banks are in the Federal Reserve?

Answer 13

12

Question 14

Minneapolis has what number of central banks?

Answer 14

9

Question 15

When you deposit currency (physical money) it is no longer considered what?

Answer 15

Money

Question 16

The reserve requirement is too ___________ of a monetary tool and hardly used.

Answer 16

Powerful

Question 17

The setting of discount rates is too ____________ and is also hardly used.

Answer 17

Ineffective

Question 18

The tool that is most effective and the only one that the Federal Reserve uses is what?

Answer 18

Open market operations

Question 19

The Fed buys bonds to solve ___________ and the Fed sells bonds to solve _____________.

Answer 19

Unemployment

Inflation

Question 20

What are the two kinds of reserves?

Answer 20

Required reserves

Excess reserves

Question 21

You divide one by the reserve ratio and get the multiplied number the money will become. For example 1/.10= 10 so $10,000 deposited back and forth will become how much?

Answer 21

$100,000

Question 22

How much money do we have in the economy and how many times is the money spent in a year?

Answer 22

$3.5 trillion

5 times

Question 23

Open market bond purchase take a place where?

Answer 23

New York

Question 24

The Federal Reserve is in charge of what banks?

Answer 24

National banks

Question 25

Who is in charge of state banks?

Answer 25

State bank commission

Question 26

A bank to bank loan is called what?

Answer 26

Federal fund loan

Question 27

The interest you pay on a bank to bank loan is what?

Answer 27

Federal funds rate

Question 28

The discount rate is a _________ Rate and the Federal Funds Rate is a __________ Rate.

Answer 28

Fixed

Market