econ exam 2
if the reserve requirement is 2.5% the potential money multiplier is
40
__________ are all examples of mandatory spending.
Social Security, interest on the national debt, and Medicare
economic growth is shown as
a shift to the right of the long run aggregate supply curve
the curve that shows how much gdp is demanded at various price levels is called
aggregate demand
which of the following will not shift the aggregate supply curve to the right
an increase in minimum wage
money
anything that is accepted in exchange for other goods and services for payment of debt
interest charges accrue on top of existing debt and saving leads to substantial growth savings over the long run this is known as the
compounding effect
which of the following events will not cause a downward shift in the aggregate demand curve
consumers expect an economic contraction will soon occur
banks
create money by making loans using the deposits of their customers
___ lags are shorter for monetary policy than for fiscal policy
decision
financial institutions greatly increase the flow of funds to the economy by
depression information costs
fiat money
does not necessarily have an inteistic value but has been declared by a government to be money
which of these is not a policy tool of the federal reserve
fiscal policy
which of the filling items is not a determinant of aggregate demand
government saving
when home values collapsed in 2008, it reduced many americans
household wealth
suppose the economy is in a recession to increase demand using discretionary fiscal policy the government can
increase government spending or reduce taxes
An increase in the incomes of the countries that purchase us made products will cause an ___ in the ___ us made products
increase; aggregate demand for
suppose consumers spend more than usual. in the short run, output will ___ ; in the long run output will ___ from its starting point
increase; remain unchanged
an expansionary fiscal policy can result in
inflation and higher GDP
the ___ effect is a reason for the negative slope of the aggregate demand
interest rate
The reward for saving is called _____, and this variable is placed on the _____ axis of the loanable funds market graph.
interest; vertical
increased taxes will shift the aggregate demand curve to the ___ and ___ output demanded
left; decrease
suppose the economy enters a recession and income falls more than the demand for loanable funds. in this case the supply of loanable funds shifts __ and the equilibrium interest rate ___
left; rises
the financial panic and credit freeze in late 2008 pointed to the feds important role as a
lender of last resort
rising productivity will increase economic growth and raise the average standard of living shifting the ___ curve to the ___
long-run aggregate supply; right
If a bank is subject to a reserve requirement of 15%, then it is required to:
place 15% of its deposits in the account with its regional Federal Reserve bank or the vault.
high taxes and or heavy regulation:
raise costs of production so that the aggregate supply curve shifts to the left.
when banks hold excess reserves, they
reduce the actual money multiplier
if zachary deposits $500 cash into his checking account his banks assets then
rise by $500 and liabilities rise by $500
which list represents monetary policy actions that are consistent with one another
sell government bonds, raise reserve requirements, raise the discount rate
a problem with supply side fiscal policies is that they
take longer to implement than demand side fiscal policies
which of the following illustrates wealth effect
the jones family has 50,000 in a bank prices in the market rose dramatically diminishing their purchasing power by 50,000
the discount rate is
the rate regional Federal Reserve banks charge depository institutions to borrow reserves.
which of the following measures is not an example of discretionary fiscal policy
the unemployment compensation program pays out more money as the unemployment rates rise
which of the following is not an explicit short run goal of discretionary fiscal policy
zero unemployment