More Si Session

Question 1

What is calculated into GDP?

Answer 1

Consumption + investment + government expenditures + net exports

Question 2

If I invest $2,000 into my bank account and it accrues an anual interest rate of 8%, how long will it take me to have 8,00 in my account?

Answer 2

18 years

Question 3

Is available credit on a credit card considered money ?

Answer 3

NO

Question 4

Checking account balance accessible by an ATM card

Answer 4

M1 and M2

Question 5

Savings deposits are

Answer 5

M2

Question 6

What is the opportunity cost of holding large quantities of cash?

Answer 6

The internet you would have earned if you had invested it

Question 7

3 main motives behind why people hold money?

Answer 7

1. Transaction motive (hold for spending)
2. Precautionary motive (for unexpected expenses)
3. Speculative motive (for if interest rate goes up)

Question 8

Are bond prices with fixed coupon rates (periodic payments) and interest rates inversely related ?

Answer 8

Yes when bond prices go up interest rate goes down

Question 9

To calculate the reserve requirement

Answer 9

Multiply required reserve ratio by the deposits