test 3

decreases; labor supply; leftward

an income tax __________ potential GDP by shifting the ___________ curve _____________

lower; decreasing

at the end of 2012 the fed was buying about $100 billion of securities per month, a much higher amount than normal. these purchases would ____________ the value of the dollar on foreign exchange markets thereby ____________ the US exports.

the bubble that was forcing asset prices higher

during the financial crisis of 08-09 the fed was concerned about ____________

cut; increased

during the reagan administration in the 1980s tax rates were _________ and the budget deficit _________

decisions related to government expenditure on goods and services, the value of transfer payments, and tax revenue

fiscal policy includes ___________

1000

if $1000 is invested at 3% per year for 10 years the investment grows to $1343.92. this means the present value $1343.92 at an interest rate of 3% 10 years from now is __________

sell US government securities

if the Fed wants to decrease the quantity of money it can _____________

low; aggregate demand

in 2012 ben bernanke said that fed policy had raised real GDP by almost 3%. He believes that the feds policy of keeping the federal funds rate _____ had resulted in an increase in ____________

the inflation rate will rise

in march 2013 the fed announced that it might decrease its open market purchases of securities by the end of the year. this announcement suggested that the fed is concerned that __________

inflation rate

monetary policy produces ripple effects some of which happen quickly and some that can take years to produce change. which of the following takes the longest to change?

decreases

on January 1, 2013 the income tax rate for single taxpayers making more than $400,000 per year increased from 35% to 39.6%. this tax increase _____________ potential GDP

increases; increases

taking amount of the supply side effects, a tax cut on labor income ____________ employment and _____________ potential GDP

has mostly been in deficit during the past 30 years

the US governments budget ______________

decreases; decreases; falls

the central bank of cobra sells securities in an open market operation, in the short run, aggregate demand ________ real GDP ________, and the price level ___________.

helps the president and the public stay informed about the state of the economy

the council of economic advisors _______

LIBOR

the european equivalent to the fed funds rate is ___________

total taz revenue minus total government outlays

the governments budget deficit or surplus equals the _____________

increases; decreases; increases

the peoples bank of china announced that it was lowering by 1.08 percentage points the one year lending rate in response to the slowdown of the chinese economy. this rate is the chinese equivalent of the federal funds rate in the US. This policy __________ the supply of loanable funds. as a result the long term real interest rate ______________ and planned expenditures __________

fed should adjust the federal funds rate to take account of deviations of inflation from its target and real GDP from potential GDP

the taylor rule states that the ____________

buy government securities in an open market operation

to increase the quantity of money in the economy, the federal reserve is likely to ________

can keep investment low

uncertainty about monetary policy ________________

buy; falls

when the fed raises the federal funds rate, in the foreign exchange market people __________ dollars and the price of the dollar ______ on the foreign exchange market