2 nd Period AddieDavidZach S. Bathroom Shelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

4 th Period HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Test Next Tuesday

Independent, Long FRQ Friday For a daily grade Look over AS/AD notes, and pay attention today!

HW due Fri Pg 292 # 18, 19 draw LF diagrams for each part of 18 and for 19

Money Demand Curve Shifters Changes in – Aggregate Price Level – GDP: more income means more volume of ____________, Dm ____. Mostly affects the _____________ demand for money. – Technology

Money Supply Shifters Monetary policy (all 3)

Link between interest rates and PL (price level).

FRQ Review/Score

Homework

13 points total 12/13=92 11/13=85 10/13=77 9/13=69 8/13=62 7/13=54 6/13=46 5/13=38 4/13=

Pine Gulch

Partners

2 nd Period New Seats AddieDavidZach S. Bathroom Shelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

New Seating Chart! HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Appointments windowwindow

Money Market Partner Candy Challenge Day 2

When the supply of money increases, the nominal interest rate… A) rises B) falls C) is unchanged D) indeterminate

When the demand for money increases, the nominal interest rate… A) rises B) falls C) is unchanged D) indeterminate

When both the demand for and supply of money decreases, the nominal interest rate… A) rises B) falls C) is unchanged D) is indeterminate

When the demand for money increases, the equilibrium quantity of money… A) rises B) falls C) is unchanged D) is indeterminate

GDP decreases. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

Fed buys bonds. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

Reserve rate falls. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

Technology leads to widespread credit & debit card use. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

Price level rises. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

Open market purchases. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

National income rises. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

GDP falls. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Open market purchases. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Price level rises. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Technology leads to widespread credit & debit card use. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Reserve rate falls. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Reserve rate falls AND GDP decreases A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm up, NIR indeterminate F) Qm down, NIR indeterminate G) Qm indeterminate, NIR up H) Qm indeterminate, NIR down

Technology leads to widespread credit/debit card use AND Fed sells bonds A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm up, NIR indeterminate F) Qm down, NIR indeterminate G) Qm indeterminate, NIR up H) Qm indeterminate, NIR down

National income falls AND Reserve Rate Falls A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm up, NIR indeterminate F) Qm down, NIR indeterminate G) Qm indeterminate, NIR up H) Qm indeterminate, NIR down

Partner Quiz +10 bonus if you don’t talk to anyone from another group.

Fed buys $50 in bonds from a bank. The reserve requirement is 10%. 1) What is the maximum increase to the money supply (in the banking system)? 2) What is the maximum change in loans (in the banking system)? Joe deposits $200 cash into his checking account. The reserve requirement is 20%. 3) What is the maximum increase to the money supply (in the banking system)? 4) What is the maximum increase to demand deposits (in the banking system)? A bank has $1,000 in demand deposits, and $300 in reserves. Then the Fed lowers the reserve requirement from 30% to 15%. 5) How much money can this bank now lend?

Swap/Grade

FRQ Grade Partner Work From Yesterday

2 nd Period AddieDavidZach S. Bathroom Shelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan

Open market operations Fed changes amount of bank reserves initially by buying/selling _______ A change in reserves has a multiplied effect on total money supply But this multiplied effect on the money supply does not affect reserves, just demand deposits and bank loans.

4 th Period HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Appointments windowwindow

Partner FRQ

Money Market Clicker Quiz Independently 8 Questions

GDP rises. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Technology leads to widespread credit/debit card use AND Fed buys bonds A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm up, NIR indeterminate F) Qm down, NIR indeterminate G) Qm indeterminate, NIR up H) Qm indeterminate, NIR down

An increase in the money supply is likely to decrease a. prices b. nominal income c. money demand d. interest rates

The total demand for money curve will shift to the left when there is: a) an increase in nominal GDP b) an increase in the interest rate c) a decline in the interest rate d) a decline in the nominal GDP

If the quantity of money supplied exceeds the quantity demanded: a) the supply of money curve will shift to the left b) the demand for money curve will shift to the right c) the interest rate will rise d) the interest rate will fall

If the demand for money decreases and the supply of money decreases, then the new equilibrium: a. quantity of money will increase, but the change in the interest rate cannot be predicted b. quantity of money will decrease, but the change in the interest rate cannot be predicted c. interest rate will increase, but the change in the quantity of money cannot be predicted d. interest rate will decrease, but the change in the quantity of money cannot be predicted

When the interest rate rises, the: a. asset demand for money increases b. transactions demand for money increases c. total amount of money demanded increases d. total amount of money demanded decreases

A decrease in the money supply usually: a. increases the interest rate and increases aggregate demand b. increases the interest rate and decreases aggregate demand c. decreases the interest rate and increases aggregate demand d. decreases the interest rate and decreases aggregate demand

Independent FRQ 25 minutes

2 nd Period AddieDavidZach S. Bathroom Shelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

4 th Period HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Homework Due

Test: Wednesday Multiple Choice Everything in Section 5 FRQ Thursday

Multiplier FRQ Groups of 3 Work together, but everyone turns in a paper.

2 nd Period AddieDavidZach S. Bathroom Shelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

4 th Period HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Multiplier FRQ Groups of 3 Work together, but everyone turns in a paper.

FRQ Review #1 Total Points: 6 A) i) $90 ii) $1,000 iii) $900 B) $50 million C) Real wages rise (1 point) because inflation falls and real=nominal-inflation (1 point).

FRQ Review #2 Total Points: 6 A) Interest rate at which banks make short-term loans to other banks. B) Open market sales C) $45 million D) It will rise. E) It will rise (1) because nominal interest will rise and inflation falls and real = nominal – inflation (1).

FRQ Review #3 Total Points: 3 A) $5,000 X 2= $10,000 B) i).8 X $5,000 = $4,000 ii) $5,000 X 5 = $5,000

FRQ Review #4 Total Points: 4 A) No change (1). Both are counted as M1, so the fall in cash was offset by the rise in demand deposits (1). B) i).8 X $3,000 = $2,400 ii) $2,400 X 5 = $12,000

Money Market Review Why Dm downward sloping? Dm shifters Dm NIR Qm – GDP aka National Income – Price Level – Technology Sm shifters + effect on NIR, Qm? – Open Market Operations – Reserve Rate – Discount Rate What effect does a lower reserve rate have on price level? What effect does a lower reserve rate have on the real interest rate?

Review When the government takes no action… How does an economy get back to long-run equilibrium?

Pop-Quiz Take out a sheet of paper. 15 Minutes

Fed conducts open market purchases (from the public) in the amount of $50. The reserve requirement is 25%. 1) What is the maximum increase to the money supply (in the banking system)? 2) What is the maximum change in loans (in the banking system)? Joe deposits $100 cash into his checking account. The reserve requirement is 25%. 3) What is the maximum increase to the money supply (in the banking system)? 4) What is the maximum increase to demand deposits (in the banking system)? A bank has $2,000 in demand deposits, and $500 in reserves. Then the Fed lowers the reserve requirement from 25% to 15%. 5) How much money can this bank now lend?

M29 Loanable Funds Market

New Graph

Why Dlf slopes downward Rate of return

Why Slf slopes up People put ________ $$ in the bank when interest rates are _______.

Why RIR instead of NIR? Banks/businesses take __________ inflation into account when they make/take _______.

Dlf shifters Changes in – Perceived business opportunities – Government borrowing – ****CROWDING-OUT EFFECT***** – When government ________ more, Dlf ____, and RIR ____. – Weakens impact of government spending on economy. – When G increases, RIR ___, so interest-_______ __ & __ goes _________.

Ways to say gov’t borrowing:

Deficit spending. Government/Treasury sells/issues bonds. Increase in spending with no increase in taxes. Cut in taxes with no cut in spending.

Slf shifters Changes in – Private savings – Capital inflows

Loanable Funds Market Partner Challenge

2 nd Period AddieDavidZach S. Bathroom JuhiShelby Stephens Danielle Attendanc WilliamEmilyZach P.ScottShelby Smith Paperw. Garrett Boss Rachael HeatherAmandaHannahJuhiJoshua windowwindow

4 th Period HannahKristenRyanAndrewCoraAlex H. Tanner Paperw. RachaelEmmaAdamCourtney J. JordanSarah Brandon Bathroom MaciKyleAlex B.Michael E.AnmolMichael D. Danielle J.NicoleSierra Attndnc. Cody J.Gabrielle CharlesCody G.BrettHunter Will Boss CierraDylan windowwindow

Appointments windowwindow

Open market purchases. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

National income rises. A) Dm increases B) Dm decreases C) Sm increases D) Sm decreases

An increase in the money supply usually: a. increases the interest rate and increases aggregate demand b. increases the interest rate and decreases aggregate demand c. decreases the interest rate and increases aggregate demand d. decreases the interest rate and decreases aggregate demand

GDP falls. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Open market purchases. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

Price level rises. A) Qm up, NIR up B) Qm down, NIR down C) Qm up, NIR down D) Qm down, NIR up E) Qm unchanged, NIR up F) Qm unchanged, NIR down

When Slf increases, the RIR A) rises, and Qlf rises B) falls, and Qlf rises C) rises, and Qlf falls D) falls, and Qlf falls

When Dlf decreases, the RIR A) rises, and Qlf rises B) falls, and Qlf rises C) rises, and Qlf falls D) falls, and Qlf falls

People & businesses believe the rate of return on future investment projects will be higher. A) Dlf increases B) Dlf decreases C) Slf increases D) Slf decreases

Government budget deficit is reduced. A) Dlf increases B) Dlf decreases C) Slf increases D) Slf decreases

People save more; savings account balances grow. A) Dlf increases B) Dlf decreases C) Slf increases D) Slf decreases

International investors believe our economy will experience high growth over the next year. A) Dlf increases B) Dlf decreases C) Slf increases D) Slf decreases

Crowding out is best described as which of the following? A) The decrease in full-employment output caused by an increase in taxes B) The decrease in consumption or private investment spending caused by an increase in government spending C) The decrease in government spending caused by a decrease in taxes D) The increase in the amount of capital outflow caused by the increase in government spending E) The increase in the amount of capital inflow caused by the increase in government spending

People & businesses believe the rate of return on future investment projects will be higher. A) Qlf rises, RIR rises B) Qlf falls, RIR rises C) Qlf rises, RIR falls D) Qlf falls, RIR falls

Government budget deficit rises. A) Qlf rises, RIR rises B) Qlf falls, RIR rises C) Qlf rises, RIR falls D) Qlf falls, RIR falls

People save more; savings account balances grow. A) Qlf rises, RIR rises B) Qlf falls, RIR rises C) Qlf rises, RIR falls D) Qlf falls, RIR falls

International investors believe our economy will experience high growth over the next year. A) Qlf rises, RIR rises B) Qlf falls, RIR rises C) Qlf rises, RIR falls D) Qlf falls, RIR falls

FRQ Partner Challenge

Take out a sheet of paper. 1 sheet per person.

Money Market Review Dm shifters Dm NIR Qm – 1) GDP aka National Income (DOWN) – 2) Price Level (UP) – 3) Technology (More Debit Card Use) Sm shifters + effect on NIR, Qm? – 4) Open Market Operations (Sales) – 5) Reserve Rate (UP) – 6) Discount Rate (DOWN) 7) What effect does a higher reserve rate have on price level? 8) What effect does a higher reserve rate have on the real interest rate?

Fed conducts open market purchases (from the public) in the amount of $100. The reserve requirement is 25%. 1) What is the maximum increase to the money supply (in the banking system)? 2) What is the maximum change in loans (in the banking system)? Joe deposits $100 cash into his checking account. The reserve requirement is 25%. 3) What is the maximum increase to the money supply (in the banking system)? 4) What is the maximum increase to demand deposits (in the banking system)? $ $ $ $

Quiz Monday over formulas Copy them down

Fed conducts open market purchases (from the public) in the amount of $200. The reserve requirement is 10%. 1) What is the maximum increase to the money supply (in the banking system)? 2) What is the maximum change in loans (in the banking system)? Joe deposits $200 cash into his checking account. The reserve requirement is 10%. 3) What is the maximum increase to the money supply (in the banking system)? 4) What is the maximum increase to demand deposits (in the banking system)? $ $ $ $

Money Demand Curve Shifters Changes in – Aggregate Price Level – GDP: more income means more volume of ____________, Dm ____. Mostly affects the _____________ demand for money. – Technology

Money Supply Shifters Monetary policy (all 3)

Dlf shifters Changes in – Perceived business opportunities – Government borrowing – ****CROWDING-OUT EFFECT***** – When government ________ more, Dlf ____, and RIR ____. – Weakens impact of government spending on economy. – When G increases, RIR ___, so interest-_______ __ & __ goes _________.

Ways to say gov’t borrowing: Deficit spending. Government/Treasury sells/issues bonds. Increase in spending with no increase in taxes. Cut in taxes with no cut in spending.

Slf shifters Changes in – Private savings – Capital inflows

LRAS and Economic Growth

Changes in RIR and economic growth