Sides Games. Which M? Just currency Which M? Currency Check deposits (demand deposits)

Sides Games

Which M?

• Just currency

Which M?

• Currency• Check deposits (demand deposits)

Which M?

• Currency• Check deposits (demand deposits)• Savings deposits• Money markets

Type of $ in US (backed by NOTHING)

Money used to save for future

Money used to buy stuff

Money used to describe worth

Double Coincidence of wants

20% RR

• Money Multiplier?

Rate banks charge each other in the overnight market?

Rate Fed charges banks in the overnight market?

Most used Fed tool?

Recession- Fed should ____ MS

Inflation- Fed should ____ MS

Reserves, Money Supply, and Interest Rates

• Fed buys bonds

Reserves, Money Supply, and Interest Rates

• Fed sells bonds

Money Supply, and Interest Rates

• Fed raises RR

Money Supply, and Interest Rates

• Fed lowers RR

Reserves > RR

Increase in M1 in short run should

• AS/AD model

Increase in M1 in long run should

• AS/AD model

Real Interest Rate is

Which graph uses nominal rate

Which graph uses real rate?

The nominal rate on the Money Market graph is really the ______

3 expansionary policy moves

3 contractionary policy moves

Government deficit spending reduces investment

• This causes…

Why is it called fractional reserve banking?

Selling bonds causes interest rates to

If interest rates decrease, what will happen to the amount of money people hold as cash?