Review3 - Macro Review Sheet for Exam 3: Fall 2006 1. The...

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Macro Review Sheet for Exam 3: Fall 2006 1. The three functions of money, the types of money – commodity and paper or fiat, Measures of money supply – M1, M2, and M3 – and liquidity, What is liquidity? 2. Components of demand for money – transaction demand, precautionary demand, and speculative demand, its relation to nominal interest rate (the opportunity cost of holding money balance), the shape of demand curve, the shape of money supply curve, why it is vertical (because Federal Reserve keeps at a certain level), the determination of nominal interest rate from demand and supply of money, effect of change in nominal interest rate when supply or demand for money changes 3. Functions of Federal Reserve, 12 district federal reserve banks, Board of seven governors, who appoints them and for what period, Who is the current chairman of Fed, Functions of Federal Reserve, Open market committee, members of this committee, its function, when does it meet 4. Discount rate v. Federal Funds Rate, what are they, who determines these rates, what is meant by the Fed fixing a target for Fed Funds Rate, How does Fed move the Fed Funds Rate towards its target, Monetary policy tools/instruments – buying/selling securities, changing reserve required ratio, and changing discount rate, how do these tools affect amount of money supply; the distinction between expansionary and restrictive or contractionary monetary policy 5. Actual reserve, required reserve, and excess reserve, how much of actual reserve can
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This note was uploaded on 02/07/2011 for the course ECON 3461 taught by Professor Spencer during the Spring '10 term at Golden West College.

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Review3 - Macro Review Sheet for Exam 3: Fall 2006 1. The...

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