Download Units 4 Breakdown: Money Market, Banking and Multiple Deposit

Units 4 Breakdown:
Money Market, Banking and Multiple Deposit Expansion, Monetary Policy
Vocabulary (Write out definitions/Define Ideas):
Reserve Requirement
Open Market Operations
Excess Reserves
Discount Rate
Federal Funds Rate
Key Information to Know (answer):
1. List and explain the 3 tools of monetary
3. How does the government target interest
policy.
rates of banks?
2. If there is a recession, what monetary policy
4. What changes the demand for money?
can the Fed implement, include the policy
Supply
and the 3 tools?
Problems to work out (not multiple choice- work out each letter)
1. Katrina deposits $500, her paycheck, into her savings account. RR is 20%
a. Find initial change
b. Change in banking system
c. Change in money supply
2. The Fed buys $50 billion worth of bonds from American consumers. RR is 10%
a. Find initial change
b. Change in banking system
c. Change in money supply
3. Juan deposits $9000 in his savings account. RR is 25%
a. The maximum dollar amount the commercial bank can lend
b. The maximum change in demand deposits in the banking system
c. The maximum change in the money supply
New Graphs/Charts to know:
Money Market
Formulas to know:
Money Multiplier= 1/RR
Amount Single bank can create=Deposit- (Deposit * RR)
Amount banking system can create (and total amount created if old money)= Single bank amount *M
If new money, amount created overall= total deposit * M
All formulas together (Deposit*RR)=Single Bank*M=Banking system+ new money=Change in money supply
Connections to Make:
Monetary Policy to Money Market
Money Market to Ig to AD
Review information:
1. Basic info and def.
2. PPC
3. Absolute /comparative
advantage,
4. Terms of trade, Gains of
trade
5. Foreign Exchange
6.
7.
8.
9.
10.
11.
12.
GDP
Business Cycle
Circular Flow Model
Price level and inflation
Loanable Funds
ADAS
Multiplier
13.
14.
15.
16.
17.
Crowding Out
Investment,
Consumption, Savings
Fiscal Policy
Self-Correcting
Economy
18. Phillips Curve
Old Formulas to know:
1. Unemployment rate= (unemployed/labor force)*100
2. Percent change= ((b-a)/a)*100
3. Price Index number= (given year/base year)*100
4. Nominal –inflation=Real (%)
5. Nominal/Deflator=Real (non %)
6. APC= C/DI
7. APS= S/DI
8. APC+APS=1,
9. MPC+MPS=1
10. MPC= ∆C/∆DI
11. MPS= ∆S/∆DI
12. Multiplier= 1/MPS
13. Tax multiplier= 1-M
14. ∆GDP=∆AE * M