Money and interest rates (OCR A-Level Economics): Quizzes
📚Quizzes
Practise the questions
15 questions from this quiz
ShowHide
Practise the questions
15 questions from this quiz
What is liquidity?
What is liquidity?
Cash easily & quickly w/o losing value
What does Narrow Money (M0) include?
What does Narrow Money (M0) include?
Physical currency & checking balances
What does Broad Money (M4) include beyond Narrow Money?
What does Broad Money (M4) include beyond Narrow Money?
Wholesale & retail transactions
Which function allows money to replace barter systems?
Which function allows money to replace barter systems?
Medium of Exchange
Which function allows money to retain value over time?
Which function allows money to retain value over time?
Store of Value
What does divisibility of money enable?
What does divisibility of money enable?
Transactions of varying sizes
Why must money supply be limited and controlled?
Why must money supply be limited and controlled?
To maintain its value
How do commercial banks create money?
How do commercial banks create money?
Via fractional-reserve banking
What is Quantitative Easing?
What is Quantitative Easing?
Purchasing long-term securities
What effect does a lower reserve ratio have?
What effect does a lower reserve ratio have?
Higher money multiplier
What happens when central banks lower interest rates?
What happens when central banks lower interest rates?
Money supply increases
How does Narrow Money compare to Broad Money in liquidity?
How does Narrow Money compare to Broad Money in liquidity?
Highly liquid
What is the Fisher equation of exchange?
What is the Fisher equation of exchange?
What happens to prices if money supply increases ( & constant)?
What happens to prices if money supply increases ( & constant)?
Prices increase proportionally
Why is demand for loanable funds downward-sloping?
Why is demand for loanable funds downward-sloping?
Lower rates = more funds demanded