Monetary Policy Cheat Sheet

Monetary Policy

Purchasing Power of the US Dollar

M1 Money Supply

Monetary Policy Cheat Sheet

2010 Multiple Choice Questions (FED, Banking, Monetary Policy & Money Creation)

2010 Multiple Choice Questions (FED, Banking, Monetary Policy & Money Creation)

This section, along with AD/AS is the second most tested.
Here are the multiple choice questions for the 2010, AP Macroeconomics exam.

Notice, topics questioned include: 
T-accounts, Velocity of Money, Bond Prices, Res. Requirements, Rational Expectations

*(the FRQ's for this section are quite easy compared to the wealth of knowledge you need to be able to answer the Multiple choice)

Answer (A) Reduce Inflation

 Answer (A) increase in the nominal output

 Answer (C) Interest rates will decline

Answer (C) increasing the reserve requirements

Answer (C) selling bonds on the open market

Answer (B) Rational Expectations

Answer (B) demand deposits

Answer (D) Engage in Open Market Purchases

Answer (B) It falls when interest rates rise, because the opportunity cost of holding money increases.

Answer (B) Increase - Decrease

Answer (D) Decrease - Decrease

Answer (E) Buying Bonds increases the MS, which lowers the interest rate

Answer (E) a decrease of $5 million