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AP Macroeconomics Flashcards: Banking And Expansion Of Money Supply

Study Banking And Expansion Of Money Supply in AP Macroeconomics with focused flashcards that help you recognize the idea, recall the key rule, and apply it in practice-style prompts.

QUESTION

Explain an expansionary monetary policy.

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ANSWER

Policy aimed at increasing the money supply to stimulate the economy. Lower rates and more money supply boost economic growth.

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AP Macroeconomics: Financial Sector

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What this deck covers

This deck focuses on Banking And Expansion Of Money Supply, giving you a quick way to review the definitions, rules, and examples that matter most for AP Macroeconomics.

How to use these flashcards

Work through these flashcards in short sessions. Try to answer each prompt before flipping the card, then revisit any cards you miss until the explanation feels automatic.

Practice questions

1 of 50Practice questions for this set
Given the reserve requirement (rrrr) is 20% and an initial deposit of $500 is made into Bank A, assume banks hold no excess reserves but there is a currency drain: borrowers keep 10% of each loan as cash rather than redepositing it. Which statement best describes the effect on the maximum expansion of checkable deposits compared with the no-currency-drain case?
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