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Assume that the United States begins defcit spending to Fund new social welFare programs. a. Using a correctly labeled loanable Funds graph, show and explain the impact oF the new spending on real interest rates in the United States. b. Explain the impact oF the change in interest rates you identifed in part (A) on each oF the Following: i. Capital investment ii. Long-term economic growth iii. The international value oF the U.S. dollar Question 2 (Essay Worth 15 points) Meagan deposits $750 From her piggy bank into her checking account at Regions National Bank. The reserve requirement is 10% and the bank has no excess reserves. a. What is the immediate e f ect on the M1 measure oF the money supply oF her deposit? Explain why. b. What is the amount oF money the local bank can lend? c. Calculate how much money the entire banking system can create. Show your work. d. Give two reasons why money creation may not increase by the
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amount you identifed in (c). (Calculate means show your work on the AP exam) Question 3 (Multiple Choice Worth 2 points) You have an opportunity to purchase season tickets For the local proFessional Football team. The sales representative shows you a color- coded picture oF the arena. Each color represents a di f erent ticket price. This best illustrates money used as a store oF value. medium oF exchange. unit oF account. liquid asset. liability. Question 4 (Multiple Choice Worth 2 points)
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Assume that the United States begins decit spending to fund new social welfare programs. Using a correctly labeled loanable funds graph, show and...
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