Macro Unit 4 Review List

handouts & visuals especially helpful

  • Functions of Money  (vis. 4.1) (activity #34)
  • Characteristics of Money  (activity #34)
  • 3 Major tools used by the Federal Reserve for 
    Monetary Policy: (vis. 4.4) (activity #39-40)
  1. Reserve Ratio  (Raise or Lower)
  2. Discount Rate    (Raise or Lower)
  3. Open Market Operations  (Buy or Sell Securities)
  • Monetary Equation of Exchange
    MV=PQ  (vis. 4.2)     (activity #36)
  • Understand the impact of each tool
  • Impact of changes in the Money Supply on:
    Int. Rates, Investment, Real GDP, Employment, Price
  • Expansion of the Money Supply (vis. 4.3
    & Contraction of the Money Supply
    (activity #37)
  • Expansionary Monetary Policy (vis. 4.5)
  • Contractionary Monetary Policy (vis. 4.6)
  • List & Explain Leakages in the Money Supply
  • Keynesians like Fiscal Policy because Monetary Policy 
    involves borrowing decisions of firms & consumers. 
    Fiscal Policy works directly on AD while Monetary
    affects AD indirectly through interest rates

Unit 4 Key Ideas

Macro Unit 4

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