Econ Monetary Policy and the Macroeconomy Final Exam Reivew Crossword
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          
 
 
Down: 1) Increase in interest rate= sell assets= reduce money supply. Decrease in interest rate= buy assets= increase money supply.6) Money Demand= Price X Real GDP. 8) Implies people are spending all of the money available on goods and services. 9) Money does not affect real variables- ex production, employment, inputs. Money is not an input to produce goods and services. Money is only a tool for buying the inputs and the output. 10) Takes time for policymakers to agree on policies. 16) Money Supply= Price Level X Real GDP Across: 2) Policies only affect inflation, but NOT output. 3) Expansionary policy causes higher inflation. 4) Any policy that increases money supply (Which reduces interest rates). 5) When government spending exceeds its tax revenue. 7) When money supply grows faster than GDP, price level INCREASES. When price increases, money becomes LESS valuable- each money buys less goods and services (lower purchasing power). 11) (Increase AD): Reduces unemployment but raises inflation. 12) High inflation. Inflation makes interest payments (in terms of money) less valuable. BUT.... also makes people holding money worse off. 13) The interest rate banks charge against each other for overnight loans. 14) Policies on spending and taxes. 15) Takes time for policies to affect economic decisions (ex. interest rates and home purchases). Because of the lags, policies chosen may no longer be "optimal". 17) Revenue government receives from printing money. 18) The Federal Funds Rate effects mortgages, student loans and auto loans. Higher rates mean less consumer consumption. 19) An extreme form of inflation. 20) Policies on money supply. 21) Policy reduces aggregate demand (AD curve shifts inwards)- borrowers cannot afford as much investment and consumption.22) Policy can only reduce either unemployment (expansionary policy) or inflation (contractionary policy), but NOT both!23) Contractionary policy causes higher unemployment (lower real GDP). 24) Any policy that reduces money supply (Which increases interest rates). 25) People need money to buy goods and services they want. Result: If there is too much money, money becomes LESS valuable. 26) (Reduce AD): Reduces inflation but raises unemployment.
 

 

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