Macro Chapter 24/25

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. Huck Finn comes along and deposits $10. After Huck's deposit, given that they Bank of Speedy Creek is profit-seeking, what amount of new loans will make it?

$9.20

Long-run aggregate supply will increase for all of the following reasons except?

A fall in the money wage rate

Consider the economy represented in the table there is

A recessionary gap equal to $50 billion

Which graph illustrates what happens when the quality of money decreases?

AD shifts to the left \<---\

Which graph illustrates what happens when expected future disposable income increases?

AD shifts to the right \--->\

Which graph illustrates what happens when government expenditures increase?

AD shifts to the right \--->\

Which of the following is an asset of the Bank of Canada

Government securities held in the bank of Canada

If new deposits are made in the banking system, which of the following will limit the amount of the new money created?

The desired reserve reserve ratio, the currency drain ratio, and the monetary base

Consider an economy starting from a position of full employment. When aggregate demand deceases, which of the following changes does not occure

The long-run aggregate supply curve shifts leftward to create the new full-employment equilibrium

We observe an increase in the price level and a decrease in real GDP. Which of the following is a possible explanation?

The price of raw materials has increased

The short-run aggregate supply curve s the relationship between the price level and the quantity of real GDP supplied, holding constant

The prices of resources inputs

Which of the following is a reason for the downward slope of the aggregate demand curve?

The wealth effect

Potential GDP is the level of real GDP at which

There is full employment

Which of the following statements about depository institutions is false?

They maximize their owner's wealth ignoring all else

The quantity theory of money begins with the equation of exchange, MV = PY, and then adds the assumption that

Velocity and potential GDP are independent of the quantity of money

Money market equilibrium occurs

When quantity of real money supplied equals quantity of real money demanded

Which of the following news quotes best describes a Keynesian view of a recession?

"Businesses are very worried about future sales and have lowered their purchases of capital equilibrium"

Which of the following news quotes best describes a new classical view of a recession?

"Rapid computerization is creating obsolete workers and higher enemployment

Which one of the following newspaper quotations best describes a movement along an SAS curve?

"The decrease in consumer spending may lead to a recession"

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. Huck Finn comes along and deposits $10. After Huck's deposit, but before and other actions have occurred, the Bank of Speedy Creek will have excess reserves of?

$9.20

An increase in the money wage rate will shift

SAS leftward, but leave LAS unchanged

Which graph illustrates what happens when resource prices decrease?

SAS shifts to the right /-->/

Which of the following steps in the description if the money multiplier process is wrong?

Some new spending returns as deposits, and currency comes in as new deposits.

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. Huck Finn comes along and deposits $10. After Huck's deposit, but before and other actions have occurred, the total amount of money in the economy has..?

Stayed the same, with currency falling and deposits rising

Consider the economy represented in the table. in short-run macroeconomic equilibrium, the price level is ____ and the level of real GDP is ______ billion. Price level Aggregate Demand Short-run Long-run 100 800 300 600 110 700 400 600 120 600 500 600 130 500 600 600 140 400 700 600

125 550

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. Huck Finn comes along and deposits $10. After Huck's deposit, and after the Bank of Speedy Creek has lent the amount t wishes to lend, the total amount of reserves in the bank will be $_____, the total amount of loans will be $______, and the total amount of deposits will be?

40.80 469.20 510

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. What is its desired reserve ratio?

8%

Which of the following will cause the aggregate demand curve to shift rightward?

An increase in expanded inflation

Which balance sheet shows the initial impact on the banking sector of an open market purchase by the Bank of Canada of $100 million government securities from the banking sector?

Assets | Liabilities Reserves + 100 | Securities - 100 |

Consider the economy represented in the table the economy is in a

Below full-employment equilibrium and resource prices will decrease

A technological advance will shift

Both SAS ans LAS rightward

According to the quantity theory of money, an increased in the quantity of money will increase the price level?

But will have no effect on real GDP or velocity of circulation

Which of the graphs illustrates a below full-employment equilibrium?

C and D

Which of the following is MOST liquid?

Chequing deposits

When a bank receives short-term deposits and issues long-term loans, this is an example of?

Creating liquidity

Which of the following is not a store value?

Credit cards

Real money is equal to nominal money

Divided by the price level

Which of the following could cause the demand cure for M1 to shift leftward?

Expanded use of credit cards

If resource prices remain constant, an increase in aggregate demand will cause an

Increase in the price level and an increase in real GDP

The economy cannot remain at a level of real GDP above long-run aggregate supply (LAS) because prices of productive resources will

Increase, shifting SAS leftward

The Bank of Speedy Creek currently has actual (and desired) reserves of $40, loans of $460, and deposits of $500. Huck Finn comes along and deposits $10. After Huck's deposit, but before and other actions have occurred, the total amount of monetary base in the economy?

Is unchanged, with deposits $10 higher and currency $10 lower

Which of the following is an economic service provided by a depository institution?

Lowering the cost if borrowing funds

According to the quantity theory of money, in the long run

M/P is constant

Which of the following is a function of money?

Medium of exchange

Consider the graph, which of the following best describes the response of this household to n increase in their annual income?

Movement from a to e \a-->---\e

If real GDP is greater than potential GDP, the economy is

Not in short-run equilibrium

If the interest rte s aboce the equilibrium rate, how is equilibrium achieved in the money market?

People buy bonds to get rid of excess money, rising the price of bonds, and lowering the interest rate

Which if the following is a component of M2 but NOT of M1?

Personal nonchequing deposits

Short-run macroeconomic equilibrium always occurs when the

Quantity of real GDP demanded equals the quantity of real GDP supplied

Which of the graphs illustrates an above full-employment equilibrium?

c only