Economics 211 exam 3 – Flashcards

To say that coins are "token money" means that:

In the U.S. Economy, the money supply is controlled by the:

Which of the following will increase the money supply: a) A decrease in the reserve ratio b) An increase in the discount rate c) the purchase of government bonds in the open market by the Federal Reserve Banks. d) the sale of government bonds in the open market by the Federal Reserve Banks.

A contractionary fiscal policy is shown as a:

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills, notes, and bonds) is the:

In a certain year, the aggregate around demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 bullion of net exports, and $20 Billion of government purchases. Full Employment GDP is $120 billion. To obtain price-level stability under these conditions, the government should:

The transactions demand for money is most closely related to money functioning as a:

The interest rate at which the Federal Reserve Banks lend to commercial banks is called the:

Open-Market operations refer to:

Which of the following is the basic economic policy function of the Federal Reserve Banks:

If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion by:

The four main tools of monetary policy are:

The purchasing power of money and the price level vary:

The money supply is backed:

A $70 price tag on a sweater in a department store window is an example of money functioning as a:

An economist who favors smaller government would recommend:

Money functions as: A) a store of value B) a medium of exchange C) a unit of account D) all of these

The asset demand for money

Which of the following best describes the cause-effect chain of an expansionary monetary policy? A) An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. B) A decrease in the money supply will lower the interest rate, increase investment spending and increase aggregate demand and GDP. C) A decrease in the money supply will raise the interest rate, increase investment, decrease investment spending, and decrease aggregate demand and GDP. D) an increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP

In the United States, the money supply (M1) is comprised of:

An appropriate fiscal policy for a severe recession is: an decrease in tax rates

Countercyclical discretionary fiscal policy calls for:

The reserve ratio refers to the ratio of a bank's:

Refer to the diagram of the market for money. The vertical money supply cure Sm reflects the fact that:

Which of the following is correct? A) Granting a bank loan creates money; repaying a bank loan destroys money B) Granting and repaying bank loans do not affect the money supply. C) Both granting and repaying of bank loans expand the aggregate money supply. D) Granting a bank loan destroys money; repaying a bank loan creates money.

Excess reserves refers to the:

The amount that a commercial bank can lend is determined by its

Expansionary fiscal policy is so named because it:

Suppose the ABC bank has excess reserves of $4000 and outstanding checkable deposits of $80000. If the reserve requirement is 25%, what is the size of the banks actual reserves?

Suppose the Federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have:

Which of the following best describes the built-in stabilizers as they function in the United States?

The amount by which government expenditures exceed revenues during a particular year is the: