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Test Bank Exploring Macroeconomics, 8th Edition /graded A+ (questions and answer) year 2024/2025 R503,85   Add to cart
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Test Bank Exploring Macroeconomics, 8th Edition /graded A+ (questions and answer) year 2024/2025

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Test Bank Exploring Macroeconomics, 8th Edition /graded A+ (questions and answer) year 2024/2025

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  • May 23, 2024
  • 25
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

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  • test bank exploring macroeconomics 8th editi
  • test bank exploring macroeconomics 8th edition
  • test bank exploring macroeconomics 8th edition g

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  • Exploring Macroeconomi
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Test Bank Exploring Macroeconomics,
8th Edition /graded A+ (questions and
answer) year 2024/2025




Money - ANSWER-Any asset that can easily be used to purchase goods and services



Medium of exchange - traded for goods, not consumption



Store of value - holds power over time



Unit of account - can be a measure of the value of other goods



Types of Money - ANSWER-Commodity Money



Commodity Backed Money



Fiat Money



COMMODITY MONEY - ANSWER-A good that had value in other uses

,Ex. If the material used to make a quarter costs the amount that a quarter costs



COMMODITY BACKED MONEY (In the textbook) - ANSWER-An asset that takes the place of a commodity



What's not money - ANSWER-Any asset included in stocks, bonds etc.



Credit cards



Why is too much money in circulation a bad thing - ANSWER-The value of the dollar is worth less,
creating inflation



Why is too little money in circulation a bad thing - ANSWER-The value of the dollar is worth more,
creating deflation



What would happen if inflation was negative - ANSWER-It would cause a deflationary spiral, deflation or
0% would cause people not to buy things, creating a deflationary spiral



Is zero percent inflation bad - ANSWER-It is not ideal because an economy would be getting close to
deflation



What types of assets do banks use - ANSWER-Banks use liquid assets to let people buy illiquid things
(harder to sell things)



What are liquid assets - ANSWER-Money that can easily be converted to cash when needed



Ex. Cash, stocks and bonds



Goods that are hard to sell, such as houses or cars, are not liquid because the money is not easily
convertible to cash

, What are bank reserves - ANSWER-Banks required to hold on to certain amount in currency or a Federal
Reserve account



ASSETS - ANSWER-Economic resources (things of value) owned by a firm



Money and other valuables belonging to an individual or business



LOANS OWED AND RESERVES



What the bank owns that has a value



What are the three assets that a bank holds onto - ANSWER-Loans



Reserve requirement



Bonds



Liabilities - ANSWER-Deposits made by customers



This is a liability because a customer can ask for their money at any point



Reserve Ratio - ANSWER-Percent of deposits held as reserves



Minimum percentage set by the Federal Reserve



Banks must have the required reserves at the end of each day



Federal Funds Market - ANSWER-If banks are short of reserve requirements, they can borrow from other
banks

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