Econ Exam 2

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit default swaps, it is clear that the ________________ structure allowed fewer people to afford homes and that the ________________ structure was safer to the health of the overall economy.

traditional; traditional

A factor that might have contributed to the weakening of the U.S. economy in 2007-2009 was

uncertainty concerning the outcome of the 2008 presidential election.

The "exotic" mortgage instrument of recent years is exemplified by the

"interest-only" mortgage

With a reserve ratio of 10%, the banking system can create ____ with each dollar of deposits.

$10

Since the global recession of 2008 and the Troubled Asset Relief Program (TARP), U.S. total public debt as a share of GDP has hovered around

100%

When comparing the severity of recessions since World War II economists focus on the ones in

1982 and 2007-2009

If the reserve ratio is .20, the money multiplier can be as high as

5

When the Federal Reserve loans money to banks, the rate it charges banks with excellent credit is the

50

In 2007, the least affordable places to live tended to be located disproportionately in

California

M1 includes

Cash + coin (currency) + checking accounts

The ______ decides monetary policy.

Federal Open Market Committee

M2 includes

M1 + savings accounts + small CDs

Which monetary aggregate is the broadest?

M2

Off-budget

Parts of the budget designated by Congress as separate from the normal budget. Programs that operate with their own revenue sources and have trust funds; Social Security, Medicare, and the Postal Service are examples

TARP was created during the Presidency of

President George W. Bush

Many years ago, the traditional mortgage loan structure specified

a down payment of 20%

Nondiscretionary fiscal policy

a set of policies that are built into the system to stabilize the economy

Liquidity Trap

a situation where zero or near zero interest rates do not stimulate borrowing

A significant adverse supply-side shock to the U.S. economy in mid-2008 came from

a tripling of world crude oil prices

Short-run contractionary fiscal policy would result in

aggregate demand moving to the left

The Federal Reserve's purchase of AIG stock was

an example of both the wisdom and problems associated with its political independence

Many years ago, the traditional mortgage loan structure specified

an initial loan-to-value ratio of 80%

Which of the following would qualify as an aggregate supply shock?

an unexpected decrease in oil prices

The Federal Funds Rate is the rate at which

banks lend to one another to meet reserve requirements

Expansionary monetary policy includes

buying bonds, lowering the discount rate, or lowering the reserve ratio

The monetary base includes

cash held by banks and by the public plus deposits at the Federal Reserve.

Which monetary aggregate is the least broad?

cash held by the public

An increase in the target for the federal funds rate would be an example of

contractionary monetary policy

The 2003 tax rebate is an example of

discretionary fiscal policy

A political problem with discretionary fiscal policy is the

expansionary bias

Between 2001 and 2003 the Federal Reserve cut interest rates 12 times. This is an example of

expansionary monetary policy

One of the most, if not the most severe recession since World War II began in the

fall of 2007

Discretionary fiscal policy

government spending and tax changes enacted at the time of the problem to alter the economy

An increasing portion of the U.S. national debt is held by

government trust funds

Discretionary fiscal policies that increase aggregate demand tend to result in

higher real GDP and a higher price level

Non-discretionary fiscal policies that increase aggregate demand tend to result in

higher real GDP and a higher price level

Home price escalation in the U.S. during 2005 fueled booms in

home building and home equity lines of credit

In January of 2006, the Federal Reserve

increased its target federal funds rate by a larger amount than it had in several years.

Discretionary fiscal policies that increase aggregate demand tend to result in

increased spending on unemployment insurance, food stamps and Medicaid

Among the most important demand side factors explaining homes prices would be the

level of mortgage interest rates

If an adverse shock reduces the level of aggregate demand, it is likely to lead to

lower real GDP and a lower price level

The stimulus package proposed by the Bush Administration in early 2008 relied upon

making permanent the 2003 income tax rate cuts, as well as tax rebates to taxpayers.

Money is useful because it serves as a

medium of exchange

In the recession of 2007-2009, the Net Change in Employment was

negative during every month of 2008

In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit default swaps, it is clear that the ________________ structure increased homeownership rates and that the ________________ structure was riskier to the health of the overall economy.

newer; newer

In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit default swaps, it is clear that the ________________ structure allowed more people to afford homes and that the ________________ structure was safer to the health of the overall economy.

newer; traditional

The portion of the Obama stimulus package that bolstered state Medicaid plans is best thought of as

nondiscretionary fiscal policy

The Federal Reserve's long standing tools include

open market operations, changing the level of the targeted interest rate, and changing the reserve ratio

On-budget

parts of the budget that rely entirely or mostly on general revenue

Political business cycle

politically motivated fiscal policy use for short-term gains just prior to elections

Which of the following are goals for monetary policy?

preventing boom and bust cycles in the economy

When the Federal Reserve loans money to banks, the rate it charges banks with excellent credit is the

primary credit rate

The stimulus package implemented by the Bush Administration in 2008 included

rebates to individual taxpayers of $600 per individual and $1200 per married couple

To signal its intention to restrict credit availability, the Federal Reserve

reduces the discount rate by ¼ of a percentage point

A Peace dividend

results from the reduction in defense spending as a war is concluded.

Contractionary monetary policy includes

selling bonds, raising the discount rate, or raising the reserve ratio

A factor tending to slow the U.S. economy early in the recession of 2007-2009 was

sharply rising crude oil prices

Compared to the U.K. and Germany the debt as a percentage of GDP in the US is

somewhat smaller

Money is useful because it serves as a

store of value

The property of money that allows us not to worry about "using it before it spoils" is called the

store of value

Major causes of the increase in U.S. federal budget deficits between 2001 and 2008 were

tax cuts, and spending on homeland security, the war in Iraq and the war in Afghanistan.

Operating budget

that part of the federal budget devoted to spending on goods and services that will be used in the current year

Capital budget

that part of the federal budget devoted to spending on goods that will last several years

In which of the decades below was the deficit as a percentage of GDP the largest?

the 1980s

The institution that governs monetary policy is

the Federal Reserve

A factor that might have contributed to the weakening of the U.S. economy in 2007-2009 was

the impending expiration of the Bush Tax Cuts of 2003

TARP was

the name given to the bank bailouts

Reserve Ratio

the percentage of every dollar deposited in a checking account that a bank must maintain in reserves

A decreasing portion of the U.S. national debt is held by

the public

The Federal Reserve expanded their traditional tools set in the 2007-2009 recession to include

the purchase of mortgage backed securities

Federal Funds Rate

the rate at which banks borrow from one another to meet reserve requirements

Which of the following would be an example of discretionary fiscal policy at work in 2001 through 2003?

the tax cuts of 2001 and 2003

By 2006 and 2007, foreclosure rates in some previously-booming states such as Nevada and Colorado were

three times the national average


Kaugnay na mga set ng pag-aaral

Lecture 19: Genetic Disease and DNA Repair

View Set

Chapter 6: Cost-Volume-Profit Relationships

View Set

Chapter 12: Workers' Compensation

View Set

Chapter 21 and 22: Working Capital Management

View Set

APUSH 401-450 Andrew Jackson, Early 1800s Literature

View Set

Course 3 Connect and Protect: Networks and Network Security

View Set

Physics Chapter 6 - Work and Energy

View Set

Chapter 5, I: Principles of Verbal Messages

View Set