ECON201 (neri) F Review

ECON201 (neri) F Review - Amt of bonds demanded...

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Ch. 12 Money Market and Monetary Policy Define: 1. goods market 2. money market Links between goods market and money market Ip, r, Md, Y Interest: Interest rate = An Individual’s Demand for Money Money: Bonds: What determines how much money an individual will decide to hold? 1. 2. 3. Ppl hold less $ when it is more expensive to hold $. ... Demand for money depends on the same 3 variables: (what happens when raises??) 1. 2. 3. The Money Demand Curve --Movement along… Due to …. --Shifts Due to… 1. 2. Supply of Money -- -- -- a. b. c. Suppose Fed changes Ms Open Market Purchases of bonds a. b. Open Market Sale of bonds
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a. EQM in the Money Market -- -- -- Excess supply of money Money supply < or > Quantity demanded Excess demand of what?? _________
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Unformatted text preview: Amt of bonds demanded &lt; or &gt; amount supplied Excess demand of money Money supply &lt; or &gt; Quantity demanded Excess supply of bonds Amt of bonds demanded &lt; or &gt; amount supplied Bond Prices and Interest Rates Inversely Related.why? Fed wants to lower the interest rate?? Aka: By doing what?? 1. 2. 3. Fed wants to increase the interest rate?? Aka: By doing what? 1. 2. 3. Fill in the Blank How do Interest Rate Changes Affect the Economy? The Fed follows and expansionary monetary policy. Fed would _________ money supply thru open market ________ of bonds.--Interest rate will ________. How is the macroeconomy affected? A __________ in the interest rate will boost several diff types of spending in the economy....
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This note was uploaded on 04/19/2008 for the course ECON 201 taught by Professor Shea during the Fall '08 term at Maryland.

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ECON201 (neri) F Review - Amt of bonds demanded...

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