Download Economics Study Guide November 2011 exam

Monday, November 14, 2011-11-14
November Exam Study Guide:
We ran out of time to review Chapter 11, so the exam will be primarily on Chapters 10, 12, and 16. Chapter 11 will be
tested on the final exam in December. Please focus your review these next two nights on 10, 12, and 16.
Know the following terms:
inside lag
monetarism
monetary policy
outside lag
money multiplier
formula
federal funds rate
prime rate
discount rate
open market
operations
money creation
The Federal Reserve Act of 1913
The “Equation of Exchange” (when velocity goes up, what happens to price?)
capital deepening
aggregate supply
gross national product
price level
recession
peak
savings
technological progress
nominal GDP
leading indicators
GDP per capita
When banks use your money to help businesses expxand, what are they doing with your money?
depreciation
fiat money
commodity money
currency
foreclosure
member bank
central bank
representative money
store of value
money supply
greenbacks
demand deposits
rubles
Earnings on a Certificate of Deposit
Year
Principal amount Interest earned at 5% Principal at end of year
1
$100.00
$5.00
$105.00
2
$105.00
$5.25
$110.25
3
$110.25
$5.51
$115.76
4
$115.76
$5.79
$121.55
5
$121.55
$6.08
$127.63
6
$127.63
$6.38
$134.01
7
$134.01
$6.70
$140.71
8
$140.71
$7.04
$147.75
9
$147.75
$7.39
$155.14
10
$155.14
$7.76
$162.90
Redraw the above chart, but add a column for each
category. Copy down the above figures in the first
column, respectively, for each category. Then add 100
dollars each year as you calculate your principal at the
end of the year. For example,
At the end of year one, you would deposit another 100 dollars, so the principal
at the end of the year would be $205 dollars. Figure the dollar amount of
interest of that number, then add another 100 dollars so that at the end of
year two, you would then have a total of (205 + 10.25 + 100 =) 315.25 dollars.
Keep up that process for the ensuing years, record your numbers and compare
year 10 on the left column ($162.90) with that of year 10 on the column that
you have added to the right of that column.