ECON 203 TEST 2 MATTHEWS OLE
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Question : Liquidity
Correct answer: the ease with which an asset can be converted
into the economy's medium of exchange
Question : Commodity Money
Correct answer: money that takes the form of a commodity
WITH intrinsic value (has value even if it were not used as money)
ex: gold
Question : M1 =
Correct answer: - currency
demand deposits
traveler's checks
other checkable deposits
Question : M2 =
Correct answer: - everything in M1
savings deposits
small time deposits
money market mutual funds
a few minor categories
Question : Reserves =
Correct answer: demand deposits - loans
Question : Required Reserves =
Correct answer: demands deposits x require reserve ration
Question : Excess Reserves =
Correct answer: reserves - required reserves
Question : Productivity
Correct answer: the quantity of goods and services produced
from each unit of labor
Question : Determinants of Productivity
Correct answer: - physical capital
human capital
natural resources
technological knowledge
Question : Physical Capital
Correct answer: the stock of equipment and structures that are
used to produce goods & services
physical capital is a produced factor of production (capital is an input)
Question : Diminishing Returns
Correct answer: the property whereby the benefit from an
extra unit of an input declines as the quantity of the input increases
when workers have a large quantity of capital to use in producing goods and services, giving them an additional unit go capital increases their productivity only slightly
increase in the saving rate leads to higher growth only for awhile