Chapter 17

The federal open market committee is make up of 7 member board of governors and

5 federal reserve district bank presidents

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

Aggregate demand curve shift to the right

The government can use __________ in the form of ___________ to increase the level of aggregate demand in the economy.

An expansionary fiscal policy; an increases in government spending

A central bank that wants to increase the quantity of money in the economy will:

Buy bonds in open markets operations

Which of the following institutions determines the quantity of money in the economy as its most important task?

Central Bank

A typical _______________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes.

Contractionary

If an economy is dealing with a recession in a banking system with ample reserves, the Federal Reserve (central bank) might

Decrease the Target federal funds rate and decrease the interest on reserve balances

Suppose that the central bank (e.g. the federal reserve) enacts an expansionary policy. (i) what should happen to interest rates? (ii) what should happen to investment spending?

Decrease; increase

When the government passes a new law that explicitly changes overall tax or spending level, it is enacting:

Discretionary fiscal policy

If bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their ____________________________ will be satisfied.

Double coincidence of wants

A central bank that desires to use contractionary monetary policy in a banking system with ample reserves can

Increase interest on reserve balances

The current chairman of the Federal Reserve Board of Governors is

Jerome Powell

When an individual's income increases so that they move from the 10% tax bracket to the 15% tax bracket, then

Only the portion of additional income over the 10% bracket will not be taxed at 15%

The tools now being used by the federal reserve system because we currently have a banking system with ample reserves are:

Open market operations, the discount rate, and interest on reserve balances (IORB)

Traditionally, the Federal Reserve uses 3 tools in order to control the money supply in a banking system with scarce reserves, They include:

Open operations, the discount rate, and the reserve requirement

The federal income tax in the United States is a/an __________ tax.

Progressive

The quantitative easing policies adopted by the federal reserve are usually thought of as:

Temporary emergency measures

What do goods like gasoline, tobacco, and alcohol typically share in common?

They are all subject to government excise taxes.

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

When inflation begins to climb to unacceptable levels in the economy, the government should:

use contractionary fiscal policy to shift aggregate demand to the left.