6203 exam 3
. At the beginning of 2009, a government had a total debt of $540 billion dollars. It ended 2009 with a $6 billion dollar budget surplus. In 2010, its budget surplus reached $8 billion dollars. What is the total debt of the government equal to at the end of 2010?
$540 billion
In 2010, 100 Japanese yen purchased .91 U.S. dollars and in 2013, it purchased .93 U.S. dollars.
2010: 109.8 yen, 2013: 107.5 yen
Which category of the money supply would you be contributing to if you deposited money into your savings account?
M2
. _________________ results when an economy experiences high unemployment and high inflation at the same time.
Stagflation
When the interest rate in an economy increases, it is likely the result of either:
a decrease in the government's budget surplus or an increase in its budget deficit
In macroeconomics, ___________________________ describes a situation in which two people each want to exchange some good or service that the other can provide.
a double coincidence of wants
Which of the following events would cause interest rates to increase?
a higher discount rate
In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical unemployment?
a shift to the left in either AS or AD
. In macroeconomics, _____________________ denotes the relationship between the total quantity of goods and services and the price level for output.
aggregate demand (AD)
The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy.
an expansionary fiscal policy; an increase in government spending
The graph above reflects a significant increase in world oil prices. What will the impact on aggregate supply most likely lead to?
an increase in input prices
Which of the following is a valid criticism of the use of money as a store of value in modern economies?
annual inflationary loss of buying power
A ______________________ means that government spending and taxes are equal.
balanced budget
If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a:
budget surplus
A central bank that wants to increase the quantity of money in the economy will:
buy bonds in open market operations
An increase in government borrowing can:
crowd out private investment in physical capital
When the economy of a country is operating close to its full capacity:
cyclical unemployment is close to zero
An increase in the government's budget surplus will cause the interest rate to:
decrease
With respect to measuring the money supply, which of the following terms describes a checking account?
demand deposits
If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used?
expansionary
If you were to survey central bankers from around the world and ask them what they believe the primary task of monetary policy should be, what would the most popular answer likely be?
fighting inflation
If a country's GDP increases, but its debt also increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.
increase or decrease
Which of the following is least likely to be the result of economic disruptive patterns caused by a prolonged period of government budget deficits?
increasing exchange rates
If the Canadian dollar is strengthening, then:
it has appreciated in terms of other currencies
A prolonged period of budget deficits may lead to ___________________.
lower economic growth
Which of the following is a traditional tool used by the Fed during recessions?
open market operations
The term "full employment GDP" is synonymous with which of the following?
potential GDP
In an AD/AS model:
real GDP is shown on the horizontal axis
If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
regressive
For firms engaged in international lending and borrowing, ____________________ can have an enormous effect on profits.
swings in exchange rates
Foreign direct investment is the term used to describe purchases of firms in another country that involve ______________________.
taking a management responsibility
Why do banks use a T-account?
the T-account separates assets on the left from liabilities on the right
When Mataeo buys Euros through _________________________, he will use his U.S. dollars to pay for them.
the foreign exchange market
In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to:
the trade deficit
The money multiplier is equal to the _______________ in the economy divided by the original _________________.
total money; quantity of money
A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy?
trade surplus
The _____________ is an example of a large-scale common currency.
euro
The _____________________________ is the largest market in the world economy.
foreign exchange market
From a macroeconomic point of view, which of the following is a source of demand for financial capital?
government borrowing
The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called:
potential GDP
If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then:
the dollar depreciated against the yen
________________ serves society in three functions: medium of exchange, unit of account, and store of value.
Money
Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result?
Northern's loan assets increase by $30 million
If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to:
a floating exchange rate
Atlantic Bank is required to hold 10% of deposits as reserves. If the central bank increases the discount rate, how would Atlantic Bank respond?
by increasing its reserves
What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks?
discount rate
If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.
double coincidence of wants
. Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing?
fiscal policies
If a Central Bank decides it needs to decrease both the aggregate demand and the money supply, then it will:
follow tight monetary policy
If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:
her M1 funds
If the price level of what firms produce is rising across an economy, but the costs of production are constant, then:
higher profits will induce expanded production
When the central bank decides to increase the discount rate, the:
interest rates increase
The U.S. economy has two main sources for financial capital; _______________________ and ____________________________.
private savings from U.S. households and firms; inflows of foreign financial investment
When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________.
regressive
Which of the following terms is used to describe the proportion of deposits that banks are legally required to deposit with the central bank?
reserve requirements
In most developed countries, the government plays a large role in society's investment in human capital through _________________________.
the education system
Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed.
total quantity; price level for output
When increasing oil prices cause aggregate supply to shift to the left, then:
unemployment and inflation increase
In macroeconomics, a _______________ describes the common way in which market values are measured in an economy.
unit of account
A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies.
weakening; less