Macroeconomics Ch 14 & 15
today, the U.S. government provides taxpayer support for about
$26 trillion of the liabilities of the entire U.S. financial industry
deficit=
(federal budget spending- federal budget receipts)/GDP x 100
assume a 1% required reserve ratio, zero excess reserves, and no currency leakages. potential money multiplier: if the federal reserve purchases $6 million in U.S. government securities, calculate the change in total deposits in the banking system as a whole:
-100 -600 million
if the reserve ratio 9% what would be the amount of the potential money multiplier that applies to a $70,000 decrease in reserves caused by a fed open market sale of that amount? how much would the money supply potentially decrease as a result of this sale? potential money multiplier: money supply would potentially decrease by $_____
-11.11 -777,777.78
if reserve ratio is 2%, would would potential money multiplier be? If Fed conducts an open market purchase of $80,000, the money supply would potentially increase by _____
-50 -$4,000,000
consider a world in which there is no currency and depository institutions issue only transactions deposits and desire to hold no excess reserves. The required reserve ratio 10%. Central bank sells $.93 billion in government securities. Results in ____ the money supply of __ billion
-a decrease in -9.30
The accumulation of borrowing by all federal government agencies is referred to as the: When considering the gross public debt, one can argue that it is overstated because:
-gross public debt -the federal government owes itself money
consider a world in which there is no currency and depository institutions issue only transactions deposits and desire to hold no excess reserves. The required reserve ratio 10%. Central bank sells $1.19 billion in government securities. Results in ____ the money supply of __ billion
-a decrease in -11.90
suppose the federal government wishes to purchase goods and services valued at $200 billion today and finances these expenditures by borrowing. According to some economists, this will lead to ____ level of national consumption and ____ level of national savings than if the expenditure had been financed by increased taxes. -if the economy is operating at full employment and the federal government increases its borrowing:
-a higher -investment will be crowded out
the fed acts like a private banking institution when it: the fed acts like a government agency when it:
-acts as the government's fiscal agent -supplies the economy with fiduciary currency
federal budget deficits are ___ the stock of the net public debt each year. As deficits have declined in relation to GDP in recent years, the amounts added to the net public debt have also ____, which has caused net public debt as a percentage of GDP to grow at a ___ pace.
-added to -decreased -slower
-an individual with several children who has just learned that she has lung cancer apples for life insurance but fails to report this recent medical diagnosis. -a corporation that recently obtained a loan from several banks to finance installation of a new computer network instead directs some of the funds to executive bonuses. -a state -chartered financial institution exempt from laws requiring it to have federal deposit insurance decides to apply for deposit insurance after experiencing severe financial problems that may bankrupt the institution
-adverse selection problem -a moral hazard problem -an adverse selection problem
-an auto loan to individual is ____ to a commercial bank -funds borrowed from a credit union in the federal funds market is ____to a commercial bank -a customer's savings deposit is ___ to a commercial bank -the banks required reserve is ____ to a commercial bank
-an asset -a liability -a liability -an asset
excess reserves
-are negative if legal reserves are not sufficient to cover required reserves -are zero if required reserves equal legal reserves -are minimized by profit-maximizing banks since they generate no income -all of the above
-loans to a private company are ___ -borrowings from a federal reserve district bank are ___ -deposits with a federal reserve district bank are ___ -U.S. treasury bills are ___ -vault cash is ____ -loans to other banks in the federal funds market are ___ -transactions deposits are ____
-assets -liabilities -assets -assets -an asset -assets -liabilities
-a $1000 balance in a transactions deposit at a mutual savings bank. item is in: -a $100,000 certificate of deposit issued by a NY bank -a $10,000 time deposit an elderly widow holds at her credit union -a $50 traveler's check -a $50,000 money market deposit account balance
-both M1 and M2 -neither M1 or M2 -M2 -both M1 and M2 -M2
Imagine that the net public debt of a country's government was currently $6 trillion. the debt was entirely held or owned by the citizens of that country. in other words, there is no external debt. If the government were to pay off the entire $6 trillion of debt today by the use of taxes, which of the following statements is true?
-both of these are true
The federal deficit-to-GDP percentage is calculated by dividing the ___ by _____ and multiplying by 100 since the dollar magnitudes of federal government deficits were very large immediately after 2008, the ______ was very large during an economic contraction, real GDP falls below the long-run level consistent with LRAS curve. Consequently, the ____ ____ which also ___ the percentage somewhat
-budget deficit -GDP -top of the ratio -bottom of the ratio -declines -increases
-whenever the federal government spends more than it receives during a given year, it operates with a ___. If federal government spending equals government revenues, then the government experiences a ___. If the federal government collects more revenues than it spends, then it operates with a ______ -the federal budget deficit is a flow, whereas accumulated budget deficits represent a _____, called the public debt -the federal budget deficit expressed as a percentage of real GP rose to about 6% in the early 1980s. Between 1998 and 2001, the federal government experienced a budget ____ but since then its budget has once more been in ______
-budget deficit -balanced budget -budget surplus -stock -surplus -deficit
the federal deposit insurance corporation
-creates moral hazard problems in that big banks take on more risk knowing the FDIC will consider them too big to fail -was created in 1933 to prevent bank runs that had been plaguing the economy during the great depression -assures depositors that their deposits will be fully recoverable regardless of how serious a bank's financial situation may be -all of the above
the $446 transfer out of Jill's bank of america deposit account causes bank of america's liabilities to ___ by $446 which requires the bank's assets to ___ by the same amount. Simultaneously, the transfer into macy's deposit account with citibank causes citibank's liabilities and assets to ___ $446. Total deposits change by ___ so total deposits and the money supply ____
-decline -fall -rise -$0 -are unaffected
if the fed engages in an open market sale with a bond dealer, the bond dealer's bank's transactions deposits liabilities will ___ and the money supply will ____
-decrease -decrease
Previously, the government operated with a balanced budget, but recently there has been a sudden increase in federal tax collections. The net public debt: The federal government has been operating with a very small annual budget deficit until three successive hurricanes hit the Atlantic Coast, and now government spending has risen substantially. The net public debt: The general national mortgage association buys U.S. treasury bonds from another government agency. The net public debt:
-decreases -increases -remains unchanged
explain how each of the following will affect the net public debt, other things being equal: -previously, the government operated with a balanced budget, but recently there has been a sudden increase in federal tax collections. -the federal government has been operating with a very small annual budget deficit until three successive hurricanes hit the atlantic coast, and now the government spending has risen substantially. -general national mortgage association buys U.S. treasury bonds from another government agency.
-decreases -increases -remains unchanged
when real federal receipts are less than real federal expenditures, the government operates with a budget _______ and, consequently, ____ to its indebtedness during those years. The net public debt _____ during those years.
-deficit -adds -increases
one way to reduce federal budget ___ is to increase taxes -another way to decrease federal budget ___ is to cut back on government spending, particularly on ____ defined as benefits guaranteed under government programs such as social security and medicare
-deficits -deficits -entitlements
ancient goldsmiths are credited with
-developing deposit slips for gold and silver -the creation of the fraction reserve banking system -creating paper notes that could purchase goods and services -all of the above
smaller trade deficits tend to accompany larger government budget deficits: other things equal, interest rates will ___ whenever there is ___ in deficits financed by an increase in borrowing:
-false -rise; an increase
money is the least liquid asset: -the value of the U.S. dollar is based on:
-false -the public's faith that the dollar can be exchanged for goods and services
-to limit the fallout from systemwide failures and bank runs, congress created the _____ in 1933 -federal insurance of bank deposit insulates depositors from risks, so depositors are ___ concerned about riskier investment strategies by depository institutions. Thus, bank managers have an incentive to invest in ____ assets to make ____ rates of return -on the one hand, the federal deposit insurance reform act of 2005 expanded the ___ -on the other hand, the law granted the FDIC greater discretion to assess risk-based deposit insurance ____ intended to restrain ____ risks
-federal deposit insurance incorporation -less -riskier -higher -moral hazard -premiums -moral hazard
the _____ the key policymaking group within the federal reserve system. Composed of the seven members of the ____ and five ___, it is responsible for _____. If monetary policymaking were to focus on using discount rates or the interest rate paid on bank reserves the ____ would become the key policymaking group
-federal open market committee is -board of governors -federal reserve bank presidents -buying and selling U.S. government securities -board of governors
When foreign dollar holders purchase new U.S. government bonds, they will have ___ dollars to spend on U.S. items, including U.S. export goods. Hence, when our nation's government operates with a budget deficit, we should expect to see foreign dollar holders spending ___ on U.S. government bonds and ___ on U.S. produced goods and services. As a consequence of the U.S. government deficit, therefore, we should generally anticipate ___ in U.S. exports relative to the U.S. imports, or a _____ U.S. trade deficit
-fewer -more -less -a decline -higher
____ intermediaries, including institutions such as commercial banks and savings institutions, insurance companies, mutual funds, and pension funds, transfer funds from ultimate lenders to ultimate borrowers. financial intermediaries specialize in tackling problems of ____ information. They address the _____ problem by carefully reviewing the credit-worthiness of loan applicants, and they deal with the ___ problem by monitoring borrowers after they receive loans.
-financial -asymmetric -adverse selection -moral hazard
Suppose the dollar value of imports to the U.S. exceed the dollar value of exports from the U.S. This implies that: If foreigners have an excess supply of dollars after trading goods and services they will likely:
-foreigners are holding an excess supply of dollars -buy more U.S. treasury bonds
when we subtract the funds that government agencies borrow from each other from the ___ public debt, we obtain the ___ public debt the public debt may impose a burden on ___ generations if they have to be taxed at higher rates to pay for the ____ generation's increased consumption of governmentally provided goods. in addition, there may be a burden if the debt leads to crowding out of current investment, resulting in ___ capital formation and hence a ___ economic growth rate. if foreign residents hold a significant part of our public debt, then we no longer owe it to ourselves. If the rate of return on the borrowed funds is ____ than the interest to be paid to foreign residents, future generations can be made better off by government borrowing. Future generations will be worse off, however, if the opposite is true.
-gross -net -future -current -less -lower -higher
the accumulation of borrowing by all federal government agencies is referred to as the when considering the gross public debt, one can argue that it is overstated because
-gross public debt -the federal government owes itself money
deficit spending ___ the total demand for credit and ___ the total supply of credit. The ___ in interest rates causes ___ in the growth of investment and capital formation, which in turn ___ the growth of productivity and improvement in society's living standard
-increases -does not change -rise -a reduction -slows
what happens to the net public debt if the federal government operates next year with a : -budget deficit -balanced budget -budget surplus
-increases -remains unchanged -decreases
suppose that the share of U.S. GDP going to domestic consumption remains constant. Initially, the federal government operating with a balanced budget, but this year is has increased its spending well above its collections of taxes and other sources of revenues. To fund its deficit spending, the government has issued bonds. So far, very few foreign residents have shown any interest in purchasing the bonds. -what must happen to induce foreign residents to buy the bonds: -if foreign residents desire to purchase the bonds, what is the most important source of dollars to buy them?
-interest rates must rise -dollars used to purchase U.S. exports
a credit card is not considered money because
-it is not a store of value -is is not a unit of accounting -it simply defers rather than completes transactions that ultimately involve the use of money -all of the above
obviously financial intermediaries need to collect money from a variety of sources so they can redirect it where it can used efficiently. The primary source of funds for a financial intermediary are known as its: the financial intermediary with liabilities of shares and checkable deposits and assets that include consumer debt and long term mortgage loans is a:
-liabilities -credit union
-Stockbrokers monitor the companies after investing funds in them, in order to _____ -commercial banks screen their borrowers before a loan can be approved in order to ____ -money market mutual funds combine the savings of many individuals in order to ____
-limit moral hazard -limit adverse selection -lower management cost
insurance companies offer safe driver discounts to encourage insured individuals to drive safely. This is an attempt to _________ pension funds tend to combine the retirement funds of many future retirees to ____ savings banks review loan applications to determine which is the potential borrowers carry high risk of default. This is an attempt to _____
-limit moral hazard -lower management costs -limit adverse selection
Money is defined by its functions which are as a ____, _____, ____ and _____ money is a highly ___ asset because it can be disposed of with low transaction costs and with relative certainty as to its value modern nations have ____ monetary systems- national currencies are not convertible into a fixed quantity of gold or silver money is accepted in exchange for goods and services because people have confidence that is can be later be exchanged for other goods and services. in addition, money has ____ value the money supply can be defined in a variety of ways, depending on whether we use the transactions approach or the liquidity approach. Using the ____ approach, the money supply consists of currency, transactions deposits and traveler's checks. This is called ____ _____ deposits are any deposits in financial institutions from which the deposit owner can transfer funds using a debit card or checks when we add savings deposits, small-denomination time deposits and retail money market mutual fund balances to ___ we obtain the measure known as ____
-medium of exchange, unit of accounting, store of value, standard of deferred payment -liquid -fiduciary -predictable -transactions -M1 -transactions -M1 -M2
-a manager of a savings and loan association responds to reports of a likely increase in federal deposit insurance coverage. She directs loan officers to extend mortgage loans to less creditworthy borrowers. This situation poses a _____ -Loan applicant does not mention that a legal judgment in his divorce case will require him to make alimony payments to his ex-wife. This situations poses ______ -an individual who was recently approved for a loan to start a new business decides to use some of the funds to take a Hawaiian vacation. Situation is _____
-moral hazard problem -an adverse selection problem -a moral hazard problem
To obtain the dollars required to purchase newly issue U.S. government bonds, foreign residents must sell ____ goods and services in the united states than U.S. residents sell abroad. Thus, U.S. must ____ U.S. exports. For this reason, the federal budget deficit and the international trade ____ tend to be related. Higher government deficits arise from increased government spending or tax cuts, which raise aggregate demand. This, larger government budget deficits can raise real GDP in ____ gap the economy is already at the full-employment level of real GDP, however, higher government deficits can only temporarily push equilibrium real GDP ___ the full-employment level. In the long run, higher government budget deficits cause the equilibrium price level to rise but fail to raise equilibrium real GDP above the full-employment level. Thus, the long-run effect of increased government deficits is simply a redistribution of real GDP per year from ____ provided goods and services to ____ provided goods and services.
-more -exceed -deficit -a recessionary -above privately -government
If U.S. federal government operates with a budget deficit it must borrow. In order to entice people to lend money to finance this deficit, the U.S. government must: As the interest rate on U.S. bonds increases, foreigners:
-pay a higher rate of interest on the bonds it sells -buy more U.S. bonds and fewer U.S. goods and services
The U.S. federal government has contemplated ways to reduce its national debt. Which of the following suggestions would best enable the government to achieve this goal? Entitlements in the U.S. are:
-reduce government spending, raise taxes, or both -non-discretionary expenditures that have been legislated by Congress
the U.S. federal government has contemplated ways to reduce its national debt. which of the following suggestions would best enable the government to achieve this goal? entitlements in the U.S. are:
-reduce government spending, raise taxes, or both -non-discretionary expenditures that have been legislated by congress
assets that people ___ exchange are typically among their more liquid assets. Most people ___ willing to accept antique military hardware in exchange, so their liquidity is relatively ___ and their usefulness as a medium of exchange is ____. Difficulties in predicting the value of antique military hardware would make them uncertain stores of purchasing power and thereby also ___ their liquidity and usefulness as forms of money
-regularly -are not -low -limited -reduce
_____ of depository institutions consist of their vault cash and deposits that they hold with ____ district banks. the fraction of transactions deposit liabilities that depository institutions hold as reserve is the ____ the _____ is equal to 1 divided by the reserve ratio
-reserves -federal reserve -reserve ratio -potential money multiplier
on a bank's balance sheet ____ are assets and ____ are liabilities
-reserves and loans -transactions deposits
since 2001, the US federal government has: which of the following is a reason for this resurgence in federal government budget deficits:
-run a budget deficit -tax revenues not keeping pace with growth in spending
the M1 measurement of the money supply includes all of the following components except: the M2 measurement of the money supply includes all of M1 plus several other highly liquid assets. which of the following is not one of those assets which is included in M2:
-savings deposits -credit card balances
when annual real federal receipts exceed annual real federal expenditures, the government operates with a budget ____ and consequently ____ to its indebtedness during those years. The net public debt ____ during those years
-surplus -does not add -decreases
A trade deficit implies that: Generally a larger U.S. trade deficit is accompanied by a:
-the dollar value of imports exceeds the dollar value of exports -a larger U.S. federal deficit government budget deficit
if the federal government has a budget deficit it can finance its spending by: which of the following statements is true regarding the national debt and federal government deficits?
-treasury bonds -there is a positive relationship between the national debt and federal budget deficit
in the presence of a short-run recessionary gap, government deficit spending can influence both real GDP and employment: in the long run, higher government budget deficits resulting from increased government spending and/or tax cuts will do all of the following except:
-true -increase equilibrium real GDP
more than 50% of U.S. public debt is owned by foreign residents if the rate of return on public investments exceeds the interest rate paid on the bonds issued to finance the investments
-true -present and future generations will be economically better off
1) deposits the bank holds in an account with another private bank 2) borrowings from another bank in the interbank loan market
1- assets 2-liabilities
government spending is $2.8 trillion, and taxes collected are $1.7 trillion.What is the government deficit?
1.1 trillion
Use the figure to help determine which of the following statements are true
1998-2001 are the only years that the U.S. federal government recorded surpluses
value of potential money multiplier is 4. reserve ratio is ___
25%
the reserve ratio is 21%. What is potential money multiplier?
4.76
which of the following statements is true when considering national banking structures around the world?
U.S. businesses only obtain approximately 30% of their funds from banks loans compared to 65% for european firms
the federal government has its best opportunity to lower its national debt when it has
a budget surplus
it may be argued that the effects of a higher public debt are the same as the effects of a higher deficit because:
a higher deficit creates a higher public debt
the U.S. currency is a _____ of the federal reserve system
a liability
From the end of WW2 through 1983 the U.S. government had consistently experienced
a trade surplus
an example of a fiduciary monetary system is
american one-dollar bills
The plotted series show that white there were a few small sub-periods during which the two deficits moved in opposite directions, the two deficits exhibit co-movement. The positive relationship between the U.S. government budget and trade deficits is supported because large U.S. government deficits are mainly financed through increases in government debt (bonds). This results in higher U.S. interest rates which in turn attract capital to the U.S. This is turn causes:
an appreciation of the U.S. dollar. Dollar appreciation makes U.S. exports more expensive and U.S. imports cheaper, and thus, a larger U.S. trade deficit
Suppose that the economy is currently operating at the full employment as depicted in the graph to the right. This, in the short-run the economy will experience
an inflationary gap
required reserves
are the minimum amount of legal reserves that a depository institution must have to bank up its checkable deposits
entitlements
are the most important component of the federal budget -include payments for social security and other income security programs
during the 1945-1946 hungarian hyperinflation, when the rate of inflation reached 41.9...
as a store of value
during the 1970's, prices quoted in terms of the Israeli currency, the shekel, rose so fast that grocery stores listed their prices in terms of the U.S. dollar and provided customers with dollar-shekel conversion tables that they updated daily. Although people continued to buy goods and services and make loans using shekels, many israeli citizens converted shekels to dollars to avoid a reduction in their wealth due to inflation. Thus, the U.S. dollar functioned as money in israel during this period
as a store of value
since 1970 the US government's budget deficit as a percentage of real GDP has
averaged approximately 3%
in 2005 national government spending is $2.00 trillion and tax collections are $2.00 trillion. This government, in 2005, experienced a :
balanced budget
which of the following statements is true concerning a fractional reserve banking system?
banks maintain a fraction of deposits on hand to meet the daily needs of their customers
Since 1970 the U.S. government's budget deficit as a percentage of real GDP has:
been negative in most years
$5 billion in traveler's checks not issued by a bank is counted in
both M1 and M2
in each of the past few years, the federal government has regularly borrowed funds to pay for at least one-third of expenditures that tax revenues were insufficient to cover. more than 60 percent of all federal expenditures now go for entitlement spending. The fact implies that the government is paying for most of its discretionary expenditures
by borrowing
in the short run, increased government budget deficits
can influence real GDP, the price level, and employment
which is most liquid
check- not car, savings bond, or stock
suppose than an particular economy has a real GDP of 12 trillion in 2004. It grows to 15 trillion in 2005. Meanwhile, the national debt was 8 trillion in 2004. In 2005 the federal government ran a budget deficit of .8 trillion, which was totally financed by borrowing. The national debt as a percentage of real GDP has:
decreased
Calculate the implied estimates of the federal budget deficit as a percentage of GDP for each year
deficit= federal budget spending-federal budget receipts. All divided by GDP for year then multiply by 100
what are the features of federal deposit insurance
depository institutions' premiums are based on the value of their deposits with the funds being held for use in the case of a failed bank so that depositors can be reimbursed
the most important component of the federal budget is
entitlements
if the fed instead generated a multiple contraction in the money supply by removing $100,000 in reserves from the banking system via an open market sale, then:
every number in the figure would have a negative value of the same absolute amount currently displayed and the basic shape of the figure would be a vertical mirror image of the existing figure, with all amount appearing below the horizontal axis
a fraction of the funds borrowed by the federal government between 2008 and 2015 were utilized to fund public investments in a number of solar power companies that produced little output and halted operations. These concerns provided no repayments to the government. In what sense might this fraction of deficit spending arguably have imposed a burden on future generations? this spending of borrowed funds:
failed to contribute to future increase in real GDP, so future generations will have to be taxed at least at a slightly higher rate than otherwise would have been required
because of the FDIC the federal government is not exposed to asymmetric information problems
false
data supports the idea that tax increases can completely eliminate actual deficits
false
in the united states, the dollar volume of payments using checks exceeds the volume using debit cards
false
since 2001, the average annual government budget deficit has exceeded 10%
false
the net interest cost of the public debt as a percentage of GDP has continually risen since 1940
false
the most prominent example of explicit guarantees of taxpayer funds is
federal deposit insurance
which of the following is a situation of moral hazard created by the existence of the FDIC
financial institutions with FDIC protection use depositors fund in riskier investment projects
net public debt is the difference between the
gross public debt and the amount of government agencies' holdings of government bonds
which of the following is not a duty of the central bank
guarantee the savings of its citizens
according to the figure, the U.S. federal government
has generated far more deficits than surpluses during the period 1940-2005
in the long run, increased government budget deficits
have no effect on equilibrium real GDP
which of the following assets is the least liquid
house not currency, stock, or 3-month treasury bill
In the short run, if the economy is at the full employment level of real GDP, an increased government budget deficit resulting from higher government spending or lower taxes is most likely to:
increase aggregate demand, raising prices and creating an inflationary
the difference is that
indirect finance is the process through which ultimate lenders channel funds to ultimate borrowers through financial intermediaries, while direct finance does not include financial intermediaries
net public debt
is gross public debt minus the portion that is held by government agencies
The U.S. government extends explicit guarantees to back up a financial institution's liabilities if the financial institution
is unable to do so because the value of its assets is too low relative to its liabilities
when sellers accept money as payment in market payment in market transactions, money is serving as a
medium of exchange
robert needs to decide between buying a slate pool table or being able to go on a canadian vacation and still having enough left over for a nonslate pool table. gets vacation and nonslate pool table. Robert has used money in what ways in making this decision?
medium of exchange and a standard unit of account
until 1946, residents of the island of YAP used large doughnut-shaped stones as financial assets. Although prices of goods and services were not quoted in terms of the stones, the stones were often used in exchanged for particularly large purchases, such as payment for livestock. To make the transaction, several individuals would place a large stick through a stone's center and carry it to its new owner. A stone was difficult for any one person to steal, so an owner typically would lean it against the side of his or her home as a sign to others of accumulated purchasing power that would hold value for later use in exchange. loans would often be repaid using the stones. These stones performed the following functions of money:
medium of exchange, store of value, and standard of deferred payment functions of money
scott is seeking a loan from his bank for a home improvement project/ He receives the loan and then decides to take a special vacation opportunity to Las Vegas and enter a gambling tournament. The bank, as a financial intermediary, is facing a problem of:
moral hazard
a natural consequence of the government continually spending more than what it takes in through tax receipits, ceteris paribus, is that
net exports take up a larger percentage of the economic activity
the portion of GDP that the government can allocate to discretionary spending will likely have to decline because the
net interest costs as a share of GDP are projected to increase
a currency will cease to function as money if
people think that they will not be able to use it to exchange for goods and services later
Since the 1940s, more often than not, the U.S. federal government has:
run a budget deficit
since the 1940s, more often than not, the U.S. federal government has:
run a budget deficit
when money is used as a means of settling debts maturing in the future, it is serving as a
standard of deferred payment
jonathan puts $200 into his savings account every month. He will use the money for college, four years from now. This scenario shows how money functions as a
store of value
when money is set aside to be used for future purchases, it is serving as a
store of value
to eliminate the deficit, a politician suggests that we should tax the rich. The politician makes a simple arithmetic calculation in which he applies the higher tax rate to the total income reported by the rich in a previous year. He says that this is how much the government could receive from increasing taxes on the rich. This argument has been proved wrong because of all the following statements except
that taxing the rich, since they have higher earnings, is the answer to solving the problem of a growing deficit
which of the following is a true statement?
the FDIC has reduced the number of depositors who have lost savings, but in doing so, has inadvertently encouraged banks to make riskier loans.
due to the Gramm-Leach-Bliley Act of 1999
the U.S. government allowed commercial banks to own stock and sell insurance policies
the opportunity cost of money holdings is
the alternative interest income foregone from not holding some other asset
which of the following is a major reason why financial intermediaries such as banks exist
the existence of asymmetric information makes financial intermediaries more efficient in channelling money to its most efficient use
which of the following statements is true when considering the expenditures of the U.S. federal government
the expenditures are used for all these purposes
which of the following statements is true when considering liquidity
the most liquid assets typically earn no or little interest
Which of the following statements is true when considering budget deficits and the national debt?
the national debt is a stock variable and the
what is the relationship between the gross public debt and the net public debt
the net public debt included government debt held by the public
the total value of all outstanding federal government securities is
the public debt
The long-run effect of higher government budget deficits on the equilibrium annual flow of real GDP is zero. Who, therefore, benefits in the long run from higher government deficits? Those who benefit in the long run from higher budget deficits are?
those who receive the larger share of the annual flow of real GDP to government-provided goods and services- that is, those to whom these goods and services are redistributed
financial intermediaries
transfer funds from savers to investors
all deposits in U.S. banks are insured by the federal deposit insurance corporation
true
entitlements are growing faster than any other part of the federal government budget
true
federal deposit insurance currently covers up to $250,000 per depositor per institution
true
from an arithmetic point of view, a federal deficit can be wiped out by simply increasing the amount of taxes collected
true
individuals purchasing new bonds issued by a corporation is an example of direct finance for the corporation
true
since 2010, the FDIC has been able to assess premium rates on banks' total liabilities
true
the FDIC possesses regulatory powers to offset risk-taking temptations to depository institution managers
true
the net public debt has continually risen since the year 2000
true
money may serve as a standard of value that allows for comparison of the relative worth of various goods and services. What function of money does this describe
unit of accounting
when money is used as a standard of value that allows people to compare the relative worth of various goods and services is serving as a
unit of accounting
If federal budget deficit increase, then a part of that deficit
will be financed by foreign dollar holders, who will buy fewer U.S. exports, thus increasing the U.S. trade deficit
if the federal budget deficits increase, then a part of that deficit
will be financed by foreign dollar holders, who will buy fewer U.S. exports, thus increasing the U.S. trade deficit