Hello! Need help with the macroeconomics assignment. Please list the letter that best answers the question AND give a brief explanation as to why. Explanations can include mathematics, fully labeled graphs, sentences. For the FRQs follow the directions in the prompt.

8. Which of the following is an example of using money \" a unir of account? a. buying a new T-shirt b. purchasing $10 worth of candy c. keeping the dollar you receive each year for your birthday for 10 years d. purting money into your savings account e. paying for lunch with your debit card 9. The central bank sets a target for which of the following? a. the income tax rate b. the overnight interbank lending rate c. the money supply d. cthe prime interest rate e. the unemployment rate 10. The real interest rate is calculated in hindsight as the nominal interest rate a. plus the rate of inflacon. b. minus the rate of inflation. . minus the expected rate of inflation. d. plus the expected rate of inflation. e. unadjusted for inflation. 11. Compared to the M1 money supply, the M2 money supply is a. smaller. d. easier to measure. b. less liquid. e. All of these c. more narrowly defined. 12.If lenders require a real interest rate of 3% and they expect 2% inflation, the nominal interest rate will equal a. 1%. d. 5%. b. 2%. e. 6%. . 3% 13. Which of the following actions could the central bank use to address inflation? a. buy government bonds b. increase interest rates . pursue quantitative easing d. decrease money demand e. raise taxes 14, The liquid assets banks keep in their vaults are known as bank a. deposits. d. money. b. savings. e. recurns. C. reserves, 15. The required reserve ratio is a. the most cash that banks are allowed to hold in their vault. b. set by the cenrral bank. c. responsible for most bank runs. d. equal to 5% of bank deposits. e. the fracrion of bank loans held as reserves, 262 Macro * Unit4 The Financial Sector 16. If rr is the reserve requirement, the Money l'nu]npl. equal to 'erg a. . d. 2, b- 1-m. - I/r'rz c.1/m. 17. Which of the following is part of the M1 1 but not part of the monetary base? a. demand deposits b. bank reserves c. currency in circulation d. deposits at the central bank e. savings accounts 18. The Federal Reserve is a(n) a. single central bank located in New York. b. government agency overseen by the Secretary of the Treasury. c. system of 10 regional banks. d. institution that oversees the banking system, e. depository institution that lends to large COrporationg - Suppl, i 19. A central bank is charged with doing all of the followmg EXCEPT a. providing financial services to commercial banks b. supervising and regulating banks. c. maintaining the stability of the financial system, d. conducting monetary policy. e. insuring bank deposits. 20. Which of the following will increase the demand for money? a. a fall in the aggregate price level b. an increase in real GDP c. technological advances d. open market operations by the central bank e. a decrease in the interest rate 21. The money supply curve is a. upward sloping. d. downward sloping. b. vertical. e. U-shaped. c. horizontal. 22. Which of the following will occur if the central bank lowers the interest paid on bank reserves (IOR)? a. The opportunity cost of making loans will decreast b. Banks will hold more reserves. . The money supply curve will shift to the left. d. Interest rates will rise. e. Aggregate demand will decrease. 23. Which of the following will shift the supply curve o loanable funds to the right? a. an increase in the rate of return on investment spending b. an increase in the government budget deficit ca dlccrease in the national saving rate d. an Increase in expected inflation e. capital inflows from abroad UNIT FOUR REVIEW 24. Crowding out is illustrated by which of the following changes in the loanable funds market? 2. a. Draw a correctly labeled graph of the market for a. a decreasing equilibrium interest rate reserves. On your graph, indicate each of the following. b. an increase in the demand for loanable funds i. the supply and demand for reserves, labeled DRI c. a decrease in the demand for loanable funds and SRI d. an increase in the supply of loanable funds ii. the policy rate and level of reserves in the e. a decrease in the supply of loanable funds economy, labeled PRI and 21 25. The supply curve for loanable funds is P b. Use your graph from part a to show how a. upward sloping. expansionary monetary policy in an economy with b. vertical. ample reserve affects the market for reserves. On the c. horizontal. graph, indicate each of the following: d. downward sloping. i. the new policy rate, labeled PR2 e. U-shaped. ii. the new quantity of reserves, labeled Q2 c. Draw an aggregate demand and aggregate supply graph to show how the new interest rate affects AD, Free-Response Questions the price level, and the level of real GDP. 1. a. Draw a correctly labeled graph of the market for (10 points) loanable funds. On your graph, indicate each of the 3. Suppose the economy is experiencing inflation. following: a. What type of monetary policy will the central bank i. the equilibrium interest rate, labeled r pursue and how will this policy change the policy rate? ii. the equilibrium quantity of loanable funds, b. Given the change in the policy rate from part a, labeled Q1 will investment and interest-sensitive consumption b. Use your graph from part a to show how an increase increase or decrease? Explain. in government spending affects the loanable c. Draw a correctly labeled AS-AD graph showing an funds market. On the graph, indicate each of the economy with an inflationary gap. On your graph, show each of the following: following: i. the equilibrium price level, labeled PL, i. the new equilibrium interest rate, labeled r2 ii. the short-run equilibrium level of real GDP, ii. the new equilibrium quantity of loanable funds, labeled Y1 labeled Q2 ini. the new aggregate demand curve after the c. Explain how the new interest rate affects the level of expansionary monetary policy, labeled AD, real GDP. (5 points) (5 points) Macro . Unit 4 Review 263AP Exam Practice Questions Multiple-Choice Questions 1. The interest rate is a. the opportunity cost of lending money. b. the price borrowers pay for the use of lenders' savings. c. apercentage of the amount saved by borrowers. d. the rate charged by banks to hold savings for one year. e. the amount earned by using profits to build a new factory. 2. Which of the following correctly shows the chain of events through which an increase in IOR will affect real GDp? a.1i- 11 TAD Treal GDP b. 1= l1 TAD lreal GDP yi- 11 TAD Treal GDP d tis - lAD - lreal GDP & savings = investment spending 3.Abudger surplus exists when the government does which of the following? 4 saves b. collects less tax revenue than it spends hasa negative budget balance d. increases the national debt & Uses expansionary fiscal policy 4. Which of the following is a task of an economy's financial system? a. maximizing risk b. increasing transaction costs c. decreasing diversification d. eliminating liquidity e. enhancing the efficiency of financial markets 5. Which of the following tools would a central bank use In response to a recession in an economy with ample reserves? a. quantirarive easing b. raising the interest paid on bank reserves c. lowering taxes d. lowering the rate on repurchase agreements e. decreasing the money supply 6. Which of the following assets is most liquid? a. stock d. murual fund b. bond e. cash c. loan 7. When money acts as a means of holding purchasing power over time, it is serving which function? a. b. . d. e. medium of exchange source of liquidity store of value unit of account source of wealth Macro Unit 4 Review 261