JCCC Econ final
In a reverse repo transaction,
the Fed borrows money from nonbank financial firms.
Which of the following is least likely to be a problem for monetary policy?
the administrative lag
When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls whose prices had remained the same. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?
the income and substitution effects
Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by
the income effect.
When the Federal Reserve acts to tighten money and credit in the economy, it is trying to reduce
the inflation rate.
The Federal Open Market Committee (FOMC) is made up of
the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis.
The Federal Reserve System was created in
1913
The central authority of the U.S. banking system is the
Board of Governors of the Federal Reserve.
Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the
amount of oranges that will be available at various prices has declined.
The seven members of the Board of Governors of the Federal Reserve System are
appointed by the president with the confirmation of the Senate.
The members of the Federal Reserve Board
are appointed for 14-year terms.
Coins in people's pockets and purses are
included both in M1 and in M2.
Purchasing groceries using a debit card best exemplifies money serving as a
medium of exchange.
Monetary policy is thought to be
more effective in controlling inflation than in moving the economy out of a recession.
A television report states: "The Federal Reserve will lower the federal funds rate for the fourth time this year." This report indicates that the Federal Reserve is most likely trying to
stimulate the economy.
If you place a part of your summer earnings in a savings account, you are using money primarily as a
store of value.
Suppose that in 2025, Ford sold 500,000 Mustangs at an average price of $28,800 per car; in 2026, 600,000 Mustangs were sold at an average price of $29,500 per car. These statements
suggest that the demand for Mustangs increased between 2025 and 2026.
The banks increase their lending when the
Fed buys bonds in the open market.
The group that sets the Federal Reserve System's policy on buying and selling government securities (bills, notes, and bonds) is the
Federal Open Market Committee (FOMC).
In the U.S. economy, the money supply is controlled by the
Federal Reserve System.
In the United States, monetary policy is the responsibility of the
Federal Reserve System.
Which one of the following is true about the U.S. Federal Reserve System?
There are 12 Federal Reserve districts each with one central bank.
Which of the following would not shift the demand curve for beef?
a reduction in the price of cattle feed
If you are estimating your total expenses for school next semester, you are using money primarily as
a unit of account.
During periods of rapid inflation, money may cease to work as a medium of exchange
because people and businesses will not want to accept it in transactions.
If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?
buy bonds in the open market
In the United States, the money supply (M1) includes
coins, paper money, checkable deposits, and savings deposits.
The U.S. public debt
consists of the historical accumulation of all past federal deficits and surpluses.
Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that
demand for clothing has grown faster than the supply of clothing.
Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with which explanation for the law of demand?
diminishing marginal utility
The relationship between quantity supplied and price is _________blank, and the relationship between quantity demanded and price is _________blank.
direct; inverse
Projecting that it temporarily may not be able to fulfill every request from depositors wanting to withdraw funds in the coming days, the Bank of Beano decides to borrow money from the Federal Reserve Bank in its district. The interest rate on the loan is called the
discount rate.
Big Bucks Bank currently holds $20 million in reserve balances. If the Fed increases the rate of interest on reserve balances held at the Fed, we would expect Big Bucks Bank to
hold even more reserves in its reserve account at the Fed, thereby reducing the amount it is willing to lend.
The value of money varies
inversely with the price level.
When high-school and college graduates apply for jobs in the labor markets,
job applicants are the "sellers" while employers are the "buyers."
In economics, the expression "You can lead a horse to water, but you can't make it drink" illustrates the
liquidity trap.
Joe deposits $200 in currency into his checking account at a bank. This deposit is treated as
no change in the money supply because the $200 decrease in currency has been converted to a $200 increase in checkable deposits.
(Consider This) Credit card balances are
not a component of M1 or M2.
Prior to the 2007-2009 financial crisis, the most frequently employed monetary policy tool was
open-market operations.
The purpose of expansionary monetary policy is to increase
real GDP.
A newspaper headline reads, "Fed Raises Discount Rate for Third Time This Year." This headline indicates that the Federal Reserve is most likely trying to
reduce inflation in the economy.
