Econ final
If the MPS in an economy is 0.4, government could shift the aggregate demand curve leftward by $50 billion by.
reducing government expenditures by $20 billion
A Major Advantage Of The Built-In Or Automatic Stabilizers Is That They
require no legislative action by congress to be made effective
Refer to the above market for money diagrams. If the interest rate was at 3 percent, people would:
sell bonds, which would cause bond prices to fall and the interest rate to rise.
The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:
setting the Fed's monetary policy and directing the purchase and sale of government securities
The aggregate demand curve:
shows the amount of real output that will be purchased at each possible price level.
The asset demand for money is downsloping because
the opportunity cost of holding money increases as the interest rate rises.
The asset demand for money
varies inversely with the rate of interest
If the monetary authorities want to reduce the monetary multiplier, they should:
Raise the required reserve ratio
When the receipts given by goldsmiths to depositors were used to make purchases:
The receipts became in effect paper money
The multiple by which the commercial banking system can expand the supply of money is equal to
The reciprocal of the required reserve ratio
The functions of money are to serve as a
Unit of account, store of value, and medium of exchange
The short-run aggregate supply curve represents circumstances where:
input prices are fixed, but output prices are flexible.
The value of money varies
inversely with the price level
When a commercial bank has excess reserves:
it is in a position to make additional loans.
Excess reserves refers to the
difference between actual reserves and required reserves
The aggregate demand curve is:
downsloping because of the interest-rate, real-balances, and foreign purchases effects.
The determinants of aggregate supply:
include input prices and resource productivity.
In the above diagram, the economy's immediate-short-run aggregate supply curve is shown by line:
3
A depositor places $10,000 in cash in a commercial bank, where the required reserve ratio is 10 percent. The bank sends the $10,000 to its Federal Reserve Bank. As a result, the actual reserves, required reserves, and excess reserves of the bank have been increased by:
$10,000, $1,000, and $9,000 respectively
A single commercial bank must meet a 25 percent reserve requirement. If the bank has no excess reserves initially and $2,000 of cash is deposited in the bank, it can increase its loans by a maximum of:
$1500
Based on the given table, at equilibrium in the given market for money, the total amount of money demanded is
$460
In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines:
4 and 3
What function is money serving when you use it when you go shopping?
A medium of exchange
If product prices were stated in terms of marbles, then marbles would be functioning primarily as
A unit of account
Refer to the diagram, in which Qf is the full-employment output. Expansionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at
AD^0
When commercial banks use excess reserves to buy government securities from the public
New money is created
A bank that has liabilities of $150 billion and a net worth of $20 billion must have
Assets of $170 billion
Suppose the reserve requirement is 10 percent. If a bank has $5 million of checkable deposits and actual reserves of $500,000, the bank:
Cannot safely lend out more money
The 12 federal reserve banks Can best be characterized as
Central banks, bankers' banks, and quasi-public banks
The discount rate is the rate of interest at which
Federal Reserve Banks lend to commercial banks.
the CROWDING OUT EFFECT arises when
Government borrows in the money market, thus causing an increase in interest rates
A Federal budget deficit is financed by the:
Government issuance or sale of Treasury securities
