Economics Test 4
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the manipulation of taxes and federal spending in order to stimulate the economy or reduce inflation is known as ____policy
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fiscal
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to positively stimulate the economy using fiscal policy, government spending should _____, and taxes should ____, or both.
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rise; fall
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Discretionary fiscal policy consists of deliberate changes in government spending and taxation designed to do which of the following?
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control inflation achieve full employment encourage economic growth
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an economy's____ output is also known as full-employment output
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potential
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which of the following problems of timing may arise in connection with fiscal policy.
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recognition lags administrative lags operational lags
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the crowding out effect is a potential flaw or result of expansionary _____ policy
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fiscal
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the total public debt represents the total amount of money owed by the Federal government to holders of U.S. government
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securities
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the public debt is essentially the total accumulation of federal budget ____ and ___ that the federal government has incurred over the years
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deficits; surpluses
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which of the following are the main reasons that deficits have emerged?
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recessions fiscal policy war financing
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discretionary fiscal policy is also known as what?
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active fiscal policy
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the more ____ the tax system, the greater the economy's built-in stability.
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progressive
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taxes restrain the economic expansion because they reduce what?
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household and business spending
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which of the following may government choose to combine in order to reduce aggregate demand and check inflation?
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tax increases and spending decreases
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economists who believe there are many unmet social and infrastructure needs in the economy usually recommend that government spending be increased during economic ____?
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recession
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the economy is often 4-6 months into a recession or inflation before the situation is clearly discernible and this is a result of what?
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recognition lag
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built in stability constitutes which of the following policies?
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non discretionary budgetary policy automatic budgetary policy passive budgetary policy
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how do transfer payments behave in relation to tax revenues as the economy goes through a business cycle?
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opposite
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which are included in the definition of public in regards to the holders of Federal debt?
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local governments state governments
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opponents of increased spending during recession and increased taxes in times of demand-pull inflation, argue that these policies expand or preserve the size of ____
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government
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the crowding out effect for an economy operating at full employment is a much more serious problem than the crowding out effect for an economy in:
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a recessionary gap
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discretionary fiscal policy action is often taken on the advice of which group?
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council of economic group
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historically, which of the following are reasons that a large US public debt might not threaten to bankrupt Federal government?
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refinancing taxation
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in the United States, the monetary authorities are members of the Board of Governors of the ____ ___ System
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Federal Reserve
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which of the following comprise the currency of the United States?
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metal coin paper money
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a second and broader definition of money includes which of the following?
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M1 plus several near-monies
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M1 and M2 are components of the ____ supply
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money
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the federal reserve banks sets ____which are the fractions of checking account balances that banks must maintain as currency reserves.
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reserve requirements
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which of the following are components of M1?
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currency in the hands of the public all checkable deposits
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the US federal reserve plays a critical role in:
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maintaining the purchasing power of the dollar
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the central authority of the US money and banking system is the ____ of ___of the Federal reserve system
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Board of Governors
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the 12 Federal Reserve Banks also serve as:
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bankers' bank
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the purpose of open-market operations is to control the nation's money supply and influence ____ rates
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interest
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the united states federal reserve system consists of how many regional banks?
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12
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an asset's _____ is the ease with which it can be converted quickly into the most widely accepted and easily spent form of money, cash, with little or no loss of purchasing power.
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liquidity
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money enables society to gain which of the following advantages?
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human specialization geographic specialization
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the 12 ___ ____ banks blend private ownership and public control, making them quasi-public banks.
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federal reserve
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which of the following is not considered to be money?
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credit cards
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paper money or currency in the United States represents who debt?
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federal reserve banks
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the ____ ___ can make available a particular quantity of money and can change that amount through their policy tools.
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federal reserve
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which of the following is the most liquid asset?
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money
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the federal reserve banks serve a function which banks and thrifts do not perform: they issue____
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currency
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cash is perfectly accessible or ___
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liquid
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real estate, stocks, bonds, and gold are examples of assets other than money that hold ____
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wealth
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the money supply in the united states essentially is "backed" by whose ability to keep the value of money relatively stable?
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government
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which of the following are benefits of the government's decision to not back currency
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- the ability to provide as much or as little money as needed to best suit the economic needs of the country - the ability to provide as much or as little money as needed to maintain the value of money
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which of the following characteristics of checks has made checkable deposits a large component of the M1 money supply?
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safety convenience
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the fed's major goal is to control the ____ _____
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money supply
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who acts as the fiscal agent (provider of financial services) for the federal government?
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federal reserve banks
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checkable deposits are the debts or liabilities of which of the following?
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thrift institutions commercial banks
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who issues paper money?
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federal reserve system
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appropriate fiscal policy that is supportive of the efforts of the nation's monetary authorities is meant to control ___
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inflation
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what happens when money rapidly loses it purchasing power?
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it loses its role as money
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which of the following are functions of money?
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medium of exchange unit of account store of value
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the federal reserve banks deal which of the following?
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thrifts commercial banks government
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the role of the US President with the confirmation of the senate is to appoint ___Board of Governors members.
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seven
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what is the interest rate charged on loans from the fed to banks and thrifts in their district?
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discount rate
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which of the following characterize near-monies?
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- highly liquid - do not function directly as a medium of exchange - can be readily converted into checkable deposits
