An open market purchase of government bonds by the Federal Reserve results in _________ in the supply of money and _________ in interest rates.
Question 1 options:
a decrease; a decrease <\/p>\n
a decrease; an increase <\/p>\n
an increase; an increase <\/p>\n
an increase; a decrease
2. Refer to Table 1. The required reserve ratio based on the information provided below must be_______.
Details: Table 1. Suppose that at a point in time the 1st Bank of Kennesaw has adeposits volume of $14,000 and its loans to its customers amount to $11,900. Inaddition, the bank is currently loaned-up and its total reserves are $2,100. TheBalance Sheet of the bank is shown below.
1st Bank of Kennesaw
Assets Liabilities Total Reserves$2,100Deposits $14,000Loans $11,900 Total Assets $14,000 Total Liabilities $14,000 Question 2 options:
12 percent <\/p>\n
15 percent <\/p>\n
10 percent <\/p>\n
8 percent
Question 3Jane has a savings account into which she puts money every month so she will eventually have enough money for a down payment on a house. This is an example of which function of money?Question 3 options:
unit of account <\/p>\n
barter <\/p>\n
medium of exchange <\/p>\n
store of value
Question 4 SavedSuppose the required reserve ratio is 6.5%, the banking system has $1,950 in total reserves, and is loaned-up. The deposits in the banking system must be
Hint: Recall the formula: Reserve ratio=Reserves\/(Customers Deposits)
Question 4 options:
$30,000 <\/p>\n
$22,500 <\/p>\n
$127 <\/p>\n
$63
Question 5 If the reserve requirement is 20%, a new deposit of $1,500 leads to a potential increasein the money supply of:
Hint: consider using the formula for money multiplier:
1) Money Multiplier=1\/Reserve Requirement
2) Apply the money multiplier to the value of new deposit
Question 5 options:
$4,000 <\/p>\n
$10,000 <\/p>\n
$8,000 <\/p>\n
$7,500
Question 6Which of the following is not included in M1?
Question 6 options:
a $500 bill in your wallet <\/p>\n
a $500 bill in your checking account <\/p>\n
a $500 bill in your friend’s wallet <\/p>\n
a $500 bill in your savings account
Question 7 Money is _______ when it has no intrinsic value, but it is nonetheless accepted as money because the government has decreed it to be money.
Question 7 options:
a store of value <\/p>\n
a medium of exchange <\/p>\n
a unit of account <\/p>\n
fiat money
Question 8 Assume initially that market interest rates are 7% and the bondholder is receiving a $70coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 10%, the bond price_______
Question 8 options:
rise to $800 <\/p>\n
rise to $700 <\/p>\n
falls to $700 <\/p>\n
falls to $800
Question 9 Which of these is a liability for a bank?
Question 9 options:
required reserves <\/p>\n
excess reserves <\/p>\n
a loan to a firm <\/p>\n
deposits made by a firm
Question 10 If the money multiplier increased, what probably happened to the reserve requirement?
Hint: Recall the formula for money multiplier:
Money multiplier=1\/Reserve requirement
Question 10 options:
It remains equal to 1. <\/p>\n
It stayed the same. <\/p>\n
It decreased. <\/p>\n
It increased.According to the Saving\/Investment approach to equilibrium, if government spending (G) is $4 trillion, business investment (I) is $3 trillion, and taxes (T) are $3 trillion, how much is savings (S) in a closed economy?
Question 1 options:
$5 trillion <\/p>\n
$3 trillion <\/p>\n
$6 trillion <\/p>\n
$4 trillion
Question 2Refer to the information provided in Table 9.1 below to answer the question(s) that follow.
Table 9.1Refer to Table 9.1. At an output level of $2,000 billion, there is an unplanned inventory change of
Question 2 options:zero. <\/p>\n
positive $10 billion. <\/p>\n
positive $100 billion. <\/p>\n
negative $100 billion.
View hint for Question 2Question 3Assume that the MPS is 0.25. Full employment is considered to be at aggregate output level of $900 billion. Currently, the aggregate output is $800 billion. What should the government do to achieve full employment?
Question 3 options:
reduce government spending by $20 billion <\/p>\n
increase government spending by $20 billion <\/p>\n
reduce government spending by $25 billion <\/p>\n
increase government spending by $25 billion
View hint for Question 3Question 4 If the MPC is 0.7, the tax multiplier is
Question 4 options:-1.22. <\/p>\n
-2.33. <\/p>\n
-3.33. <\/p>\n
-2.22.
View hint for Question 4Question 5 Assume that the MPS is 0.25. Full employment is considered to be at aggregate output level of $800 billion. Currently, the aggregate output is $700 billion. What should the government do to achieve full employment, while also maintaining the federal budget balanced (not increasing the deficit)?
Question 5 options:
increase government spending and reduce taxes by $100 billion <\/p>\n
reduce government spending and taxes by $100 billion <\/p>\n
increase government spending and taxes by $100 billion. <\/p>\n
none of the above
View hint for Question 5Question 6 Under a cyclically balanced budget, a government should _____ when the economy is growing and _____ when GDP is declining.
Question 6 options:
raise taxes; raise spending <\/p>\n
raise taxes; reduce spending <\/p>\n
reduce taxes; reduce spending <\/p>\n
reduce taxes; raise spending
View hint for Question 6Question 7 If Sandra has an income of $40,000 and disposable income of $30,000, how much does she pay in taxes?
Question 7 options:
40,000 <\/p>\n
0 <\/p>\n
30,000 <\/p>\n
10,000
View hint for Question 7Question 8 Automatic stabilizers include all of the following EXCEPT:
Question 8 options:
All of the answers are correct. <\/p>\n
Transfer payments. <\/p>\n
Increased research and development. <\/p>\n
Tax revenues.
View hint for Question 8Question 9 According to the full aggregate expenditures model, which will have the greater stimulus effect on the economy: the same amount increase in government spending or decrease in taxes?
Question 9 options:
It depends on marginal propensity to consume (MPC). <\/p>\n
The decrease in taxes will have the greater stimulus effect on the economy. <\/p>\n
The increase in government spending will have the greater stimulus effect on the economy. <\/p>\n
The two have the same effect.
View hint for Question 9Question 10 Which of these is a description of an automatic stabilizer of the economy?
Question 10 options:
When the economy is booming, tax receipts decrease. <\/p>\n
When the economy declines, tax receipts decrease. <\/p>\n
When the economy is booming, transfer payments increase. <\/p>\n
When the economy declines, transfer payments decrease. <\/p>\n","protected":false},"excerpt":{"rendered":"
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