Question

Select the correct answer:

A (unit of account; store of value) is any commodity or token that can be held and exchanged later for goods and services.

The Fed’s main policy-making committee is the (Board of Governors; Federal Open Market Committee).

The Fed sets the minimum percentage of deposits that must be held as reserves, which is called the (discount rate; required reserve ratio).

The currency in a bank’s vault is part of the bank’s (reserves; loans).

The interest rate at which the Fed stands ready to lend reserves to commercial banks is the (discount; federal funds) rate.

The purchase or sale of government securities by the Federal Reserve is an (unit of account; open market operation).

Along the aggregate (supply curve, demand curve) a rise in the price level increases the quantity of real GDP supplied.

When potential GDP exceeds real GDP, (an inflationary; a recessionary) gap exists.

An increase in the money price of oil might start a (demand-pull; cost-push) inflation.

According to the Eye on The Business Cycles on page 529 textbook, why did the US go into a recession in 2008? (AS and AD shifted leftward; AS shifted leftward and AD shifted rightward).

Answer 1

A (unit of account) is any commodity or token that can be held and exchanged later for goods and services.
ONe of the features of money is that it is a unit of account.

The Fed sets the minimum percentage of deposits that must be held as reserves, which is called the (required reserve ratio).
Reserve ratio must be held as cash or liquid assets by the bank.

The currency in a bank’s vault is part of the bank’s (reserves)

The interest rate at which the Fed stands ready to lend reserves to commercial banks is the (federal funds) rate.