concentrated test
. (Table) According to the table, the number of people in the labor force is: Employed 85 Unemployed seeking work 25 Discourage workers 15 Retired 10 115. 110. 130. 120.
110
Suppose the consumer price index in 2006 was 100 and its corresponding basket of goods was $19,000. If that same basket of goods cost $23,000 in 2010, what was the value of the CPI in that year?
121 To find the value of the CPI in 2010, divide the cost of the basket of goods in 2010 by its cost in 2006 and multiply by the value of the CPI in 2006. The equation is CPI = ($23,000/$19,000) × 100 = 1.21 × 100 = 121.
According to the table, what is the unemployment rate of this economy? population 500 number of employed 300 number unemployed 50 10% 14.3% 25% 16.67%
14.3
(Table: Money Measure Components, June 2010) Based on the table, M1 for June 2010 was: currency 883.6 travelers check 4.8 demand deposits 467 saving deposits 5086.1 small denomination time deposits 1054 other checkable deposits 382 retail money funds 746.6 1,355.4 billion. $1,737.4 billion. $1,350.6 billion. $1,732.6 billion.
1737.4
What is real GDP in 2014 dollars using 2013 prices? Apples Price Pears Price Apples Quantity Pears Quantity 2013 $1.00 $1.00 100 120 2014 $0.80 $2.00 150 100
250
Using the equation of exchange, if the money supply is $4 trillion, the price level is 2, and the level of output (real GDP) is $6 trillion, then the velocity of money is: 3. 12. 1.33. 2.
3
When the MPC is .75, a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP by $75 billion $300 billion $100 billion $400 billion
300
Sumit deposits $1,500 cash into his checking account. The reserve requirement is 25%. What is the change in his bank's required reserves? $1,500 $1,125 $375 $6,000
375
If the marginal propensity to consume is 3/4, the simple multiplier is 1/4 1.33 4 3
4
In 2015, interest payments on the national debt constituted about what percentage of the federal budget? Please choose the correct answer from the following choices, and then select the submit answer button. 14% 6% 5% 1%
6%
The Fed's Board of Governors consists of _____ members who are appointed by the president and confirmed by the Senate. Please choose the correct answer from the following choices, and then select the submit answer button. four twelve seven fifty
7
Suppose that a bond's total interest payments are $400 and its yield is 5%. How much is this bond's price? $8000 $200 $400 $80
8000
Money Multiplier
= 1/Reserve Requirement
Price of Bond
= Annual Interest Payment ÷ Yield (%)
If the Fed wants to raise the interest rate, it will ______ bonds, which ________ bond prices. A) sell; lowers B) sell; raises C) buy; lowers D) buy; raises
A
Discretion:
A flexible money approach based on current economic conditions. It is useful in severe recessions when constant money growth might not be enough_
fiscal sustainability
A measure of the present value of all projected future revenues compared to the present value of projected future spending.
Producer price index (PPI):
An index of the average change in prices received by producers for their output.
In counteracting a negative supply shock, the Fed could achieve ______ by using ______ monetary policy. A) both price stability and full employment; expansionary B) full employment but not price stability; expansionary C) both price stability and full employment; contractionary D) price stability but not full employment; expansionary
B
leakages caused by:
Banks choosing to hold excess reserves by not lending out the maximum amount allowed. Individuals and businesses holding money in cash rather than in a bank. Foreign consumers, businesses, and governments holding cash in reserves or as a medium of exchange.
A lower interest rate increases consumption, investment, and __________, which ___________ aggregate demand. A) imports; increases B) imports; decreases C) exports; increases D) exports; decreases
C
In which of the following is a risk-averse investor MOST likely to invest? Please choose the correct answer from the following choices, and then select the submit answer button. CDs C-rated bonds high-return bonds growth stocks
CDs
Example: Suppose a market basket consists of pizza and soda Base year prices: Pizza = $6 and Soda = $2 Current year prices: Pizza = $8 and Soda = $3
CPI = ($8 + $3) ÷ ($6 + $2) × 100 = 137.5 (average prices rose 37.5% since the base year)
CPI
CPI = (Cost in current period) ÷ (Cost in base period) × 100
If there is a general rise in fear of the financial system: A) the potential multiplier will rise. B) the potential multiplier will fall. C) the actual multiplier will rise. D) the actual multiplier will fall.
D
In times of economic downturn the Fed will engage in ____ monetary policy by ____ bonds. A) contractionary; buying B) contractionary; selling C) expansionary; selling D) expansionary; buying
D
Keynesian Money Theory
Increasing the money supply leads to greater investment when the economy is healthy. In times of severe recession, however, monetary policy is ineffective. Fiscal policy is the preferred approach to restore the economy.
Jennifer received news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%. Based on the given information, which of the following is true? Jennifer is losing purchasing power by 2%. Jennifer's purchasing power will rise by 2%. Inflation has no impact on purchasing power. Jennifer's purchasing power will rise by 7%
Jennifer is losing purchasing power by 2%.
Decision lag:
Legislative process to enact policies
Contractionary Monetary Policy:
Less money → higher interest rates → lower C, I, G, and (X − M) = decrease in aggregate demand and output
M2 =
M1 + "near monies" (savings accounts, money market deposit accounts, small-denomination time deposits, and money market mutual fund accounts)
. Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is true? M1 and M2 both rose by $5,000. Neither M1 nor M2 changed because the transfer was done at the same bank. M1 went down by $5,000, but M2 was unchanged. Both M1 and M2 were reduced by $5,000.
M1 went down by $5,000, but M2 was unchanged.
Rules:
Money grows by a fixed amount each year, preventing monetary policy from causing too drastic an effect because the economy is inherently stable in the long run.
open market operations
The buying and selling of U.S. government securities, such as Treasury bills and bonds, to adjust reserves in the banking system.
Suppose the consumer price index in 2010 was 150 and its corresponding basket of goods was $19,000. If the consumer price index was 140 in 2006, what is the cost of that same basket of goods in that year?
To find the cost of the basket of goods in 2006, divide the CPI in 2006 by the CPI in 2010 and multiply by the cost of the basket of goods in 2010. The equation is Cost in 2006 = (140/150) × $19,000 = 0.9333 × $19,000 = $17,733.
Other retirement programs
Traditional IRAs use pretax dollars to fund investments; taxes are paid upon withdrawal after age 59.5. Roth IRAs use after-tax dollars to fund investments. Contributed funds (but not earnings on those contributions) can be withdrawn anytime without penalty, and no taxes are paid on withdrawals (including earnings on investment) after one reaches the age of 59.5.
financial intermediaries
accept funds from savers and efficiently channel these to borrowers, reducing transaction and information costs, as well as lowering risk. A bond is a contract between a seller (government or company) and a buyer. As a general rule, as market interest rates rise, the value of bonds (paying fixed dollars of interest) fall, and vice versa.
. Which one of the following will cause the demand of loanable funds curve to shift rightward? businesses are more confident in the future of the economy an increase in government regulations that make plant expansion difficult an increase in asset prices leading to a decrease in purchases of stocks and bonds household's wealth increases
businesses are more confident in the future of the economy
Quantitative easing refers to the process whereby the Federal Reserve: buys securities to stimulate the economy. raises interest rates to fight inflation. sells securities to stimulate the economy. decreases the money supply to fight inflation.
buys securities to stimulate the economy
When the economy is operating at the natural rate of unemployment: frictional unemployment is zero. cyclical unemployment is zero. structural unemployment is zero. the sum of frictional and structural unemployment is zero.
cyclical unemployment is zero.
In a speech in September 1998, then-Chairman of the Federal Reserve Alan Greenspan posed the question as to whether there was a new economy. He noted that inflation was falling even as the economy was well into a business expansion. According to an aggregate demand and aggregate supply framework, this result could be explained by aggregate _____ and aggregate _____. Please choose the correct answer from the following choices, and then select the submit answer button. demand decreasing; supply increasing supply increasing; demand increasing even more demand increasing; supply increasing even more Incorrect: demand increasing; supply decreasing demand increasing; supply decreasing
demand increasing supply increasing even more
Which of the following is NOT mandatory spending? Please choose the correct answer from the following choices, and then select the submit answer button. education interest on the national debt Medicare Social Security
education
10. Assume initially that market interest rates are 7% and the bondholder is receiving a $70 coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 8%, the bond price: rises to $1,125. falls to $800. falls to $875. falls to $700.
falls 875
One strength of the use of discretionary fiscal policy is the timing lags. True False
false
Since March 2008, the discount rate has been: equal to the federal funds rate. 0.5% or less. less than the federal funds rate.. greater than the federal funds rate.
greater than the federal funds rate
Which of the following would NOT cause inflation? Please choose the correct answer from the following choices, and then select the submit answer button. the government increasing the supply of money increasing input prices increasing consumer wealth an increase in the supply of food
increase in the supply of food
According to the Taylor rule, if inflation is above the Federal Reserve's target and there is a positive output gap, the Fed should: increase the target federal funds rate. decrease the target federal funds rate. not change the target federal funds rate. use quantitative easing
increase the target federal funds rate
Assume that the reserve requirement is 20% and the Federal Open Market Committee buys a $100,000 bond. The money supply: decreases by $100,000. increases by a maximum of $100,000. increases by a maximum of $500,000. increases by a maximum of $20,000.
increases by a maximum of 500,000
Which of the following is NOT a role of financial institutions? Please choose the correct answer from the following choices, and then select the submit answer button. diversifying assets to reduce risk reducing information costs increasing product demand reducing transactions costs
increasing product demand
When an economic event takes place, changes may ripple throughout the economy for up to three months before monetary authorities begin to see changes in the data. This is: Please choose the correct answer from the following choices, and then select the submit answer button. implementation lag. decision lag. recognition lag. information lag.
information
All of the following are tools of fiscal policy except one. Which is the exception? Transfer payments Interest rates Government spending Taxes
interest rates
Inflation
is a general rise in prices throughout the economy. Prices for individual goods can fluctuate up or down, but the price level captures the overall trend in the movement of prices.
compounding effect
is powerful because it causes debt (if no payments are made) and savings to increase dramatically over time.
federal deficit
is the annual amount by which government spending exceeds tax revenues.
Monetary policy .
is the process by which a country's money supply is controlled to target interest rates that subsequently influences economic output and prices
When the federal government pays off debt to the Federal Reserve, what happens to the quantity of money in circulation? It decreases. It returns to zero. It increases. It stays the same.
it decreases
The Federal Reserve Act mandates monetary policies that will: Please choose the correct answer from the following choices, and then select the submit answer button. . maintain moderate employment. keep long-term interest rates at low levels. lead to stable prices. lead to decreasing prices.
lead to stable prices
The financial panic and credit freeze in late 2008 pointed to the Fed's important role as a: promoter of full employment promoter of price stability. lender of last resort. creator of inflation.
lender of last resort
ight monetary policy refers to the Federal Reserve: selling bonds to bring the economy to full employment. buying bonds to pull reserves from the banking system. raising interest rates, usually to fight inflation. increasing excess reserves to bring the economy to full employment.
raising interest rates, usually to fight inflation.
The loanable funds market model describes the financial market for: Please choose the correct answer from the following choices, and then select the submit answer button. saving and spending.. saving and investment. saving and buying. buying and selling.
saving and investment
When the Fed wants to decrease the money supply, it will: sell bonds. lower taxes. lower the federal funds rate. buy bonds.
sell bonds
. All of these are considered monetary policy lags EXCEPT: information lag. decision lag. speculation lag. implementation lag.
speculation lag
Automatic stabilizers are designed so that as income falls: spending rises to a degree that a recession automatically ends. spending does not fall as much as income. the rate of a decrease in spending accelerates. government spending falls so that the budget is always balanced.
spending does not fall as much as income.
During the 1970s, when handheld calculators became popular and replaced slide rules in performing computations, workers in the slide rule industry lost their jobs. These workers' unemployment status is: cyclical. natural. structural. frictional.
structural
An asset's liquidity is determined by how fast, easily, and reliably it can be converted into cash.
t
Borrowing money to finance the debt raises interest rates, making it more expensive for individuals and businesses to borrow money. This is the crowding-out effect.
t
Classical theorists do not believe that monetary policies are effective at all.
t
Fed Funds Rate Target = 2 + Inflation Rate + 1/2 (Inflation Gap) + 1/2(Output Gap)
t
Keynesians and monetarists believe that monetary policy can be effective in the short run, but not in the long run
t
Money is created when banks make loans that eventually get deposited back into the system, generating checkable deposits. Part of these deposits are held as new reserves while the rest is again loaned out, creating even more money as it gets deposited back into the system.
t
Social Security and Medicare liabilities rise each year as Americans live longer and health care costs rise. These two components pose a big concern for future debt.
t
The Fed is composed of a seven-member Board of Governors and twelve regional Federal Reserve Banks.
t
The labor force is the total number of people employed or unemployed. Employed persons are individuals age 16 and over who work for pay, whether full-time, part-time, or even temporary. Unemployed persons are those without jobs but actively seeking work.
t
bout half of U.S. public debt is held externally, by foreign governments and investors. Of this amount, about 40%, or about $2.4 trillion, is held by China and Japan.
t
federal funds rate, an interest rate that influences nearly all other interest rates. The federal funds rate was near 0% from 2008 to 2015.
t
quantity theory of money is a product of the classical school of thought, which concludes that the economy will tend toward equilibrium at full employment in the long run.
t
leakage-adjusted money multiplier .
takes into account the excess reserves and cash holdings that reduce the loans made and therefore reduces the actual money multiplier
Which school of economic thought is MOST closely associated with calls for monetary rules to guide monetary policy decisions? the Keynesian school the classical school the monetarist school the Austrian school
the monetarist school
If the reserve requirement is 25%,
the money multiplier = 1/0.25 = 4.
According to classical economists, if there is a 12% increase in the money supply, what will happen to price levels? Please choose the correct answer from the following choices, and then select the submit answer button. The price level will decrease by 88%. The price level will increase by 88%. The price level will decrease by 12%.. The price level will increase by 12%.
the price level will increase by 12%
Which part of government finance is called monetized debt? Please choose the correct answer from the following choices, and then select the submit answer button. the sale of bonds to foreign entities the sale of bonds to the Federal Reserve the sale of bonds to the domestic public the sale of government assets
the sale of bonds to the federal reserve
In the classical quantity theory of money, which variables were considered fixed? Please choose the correct answer from the following choices, and then select the submit answer button. velocity and output money and price levels price level and output velocity and price level
velocity and output
3. Which one of the following will cause the supply of loanable funds curve to shift rightward? lowering of firms' expectations about the economy an increase in the government deficit an increase in government regulations that make plant expansion difficult workers fear that unemployment will increase
workers fear that unemployment will increase
expansionary monetary policy
Fed actions designed to increase the money supply and lower interest rates to stimulate the economy (expand income and employment).
he _____ is the central bank of the United States. Securities and Exchange Commission U.S. Treasury Federal Reserve System Federal Deposit Insurance Corporation
Federal Reserve System
Example: If a bond pays $100 per year, and the yield is 6%, the price of the bond is
$100 ÷ 0.06 = $1,667.
Employer-sponsored programs
Fixed contribution plans, such as 401(k), 403(b), and TIAA-CREF, allow workers to contribute pretax dollars and employers to partially match contributions. Pensions are monthly payments made by employers to their retired employees based on length of employment with the company.
Which of the following is a supply-side fiscal policy? Unemployment benefits Making tax rates more progressive Grants for basic research Repealing beneficial regulations
Grants for basic research
Importance of Interest Rates on the Economy
Higher interest rates affect aggregate demand by: Making borrowing more expensive, forcing consumers and firms to cut spending and investing Giving people more incentive to save than spend Forcing the government to spend more on financing the national debt Increasing the value of the U.S. dollar, making U.S. exports more expensive
monetary rule
Keeps the growth of money stocks such as M1 or M2 on a steady path, following the equation of exchange (or quantity theory), to set a long-run path for the economy that keeps inflation in check
Suppose that government spending decreases by $200 billion and that the marginal propensity to consume equals 0.80. The equilibrium level of real GDP will decrease by
1,000 billion
2010 200 2011 230 2012 250 If 2010 is the base year, then the consumer price index for 2012 is: 114. 125. 100. 115.
125
If the reserve requirement is 20%, the money multiplier is: 4. 0.8. 5. 0.2.
5
money illusion
A misperception of wealth caused by a focus on increases in nominal income but not increases in prices.
Deflation
A reduction in the rate of inflation. An economy experiencing disinflation still faces inflation, but at a declining rate.
Taylor rule
A rule for the federal funds target that suggests the target is equal to 2% + Current Inflation Rate + 1/2(Inflation Gap) + 1/2(Output Gap).
inflation targeting
A rule for the federal funds target that suggests the target is equal to 2% + Current Inflation Rate + 1/2(Inflation Gap) + 1/2(Output Gap).
Store of value:
Allows people to save now and spend later.
Consumer price index (CPI): .
An index of the average change in prices of a market basket of consumer goods and services
Open market operations:
Buying and selling government securities to target the federal funds rate.
Medium of exchange:
Eliminates the double coincidence of wants common to barter.
Reserve requirements:
Establishing the minimum level of reserves banks must hold.
Expansionary Monetary Policy:
More money → lower interest rates → higher C, I, G, and (X − M) = increase in aggregate demand and output
discretionary fiscal policy
Policies that involve adjusting government spending and tax policies with the express short-run goal of moving the economy toward full employment, expanding economic growth, or controlling inflation.
The regional banks and their branches conduct the following services:
Provide a nationwide payments system. Distribute coins and currency. Regulate and supervise member banks. Serve as the banker for the U.S. Treasury.
Unit of account:
Reduces the number of prices needed to just one per good.
Discount rate:
Setting the interest rate at which banks can borrow from the Fed.
Government-sponsored programs
Social Security: Current workers pay benefits of retirees through the payroll tax on wages.
What happens to the amount of funds supplied to the loanable funds market when the interest rate decreases? The amount of loanable funds supplied decreases. The amount of loanable funds supplied increases. The amount of loanable funds supplied stays the same. The amount of loanable funds supplied fluctuates up and down as the interest rate decreases.
The amount of loanable funds supplied decreases.
GDP deflator: .
The broadest index used to measure inflation; it includes the prices of all goods and services in the economy
Recognition lag:
The time before a trend in the data is certain enough to warrant a change in policy.
Implementation lag:
The time it takes for banks and financial markets to react to the policy change.
Information Lag
The time it takes for economic data to become available.
Decision lag:
The time it takes for the Federal Reserve Board to meet and make policy decisions.
Implementation lag:
Time required after laws are passed to set up programs
Information lag:
Time required to acquire macroeconomic data
Recognition lag:
Time required to recognize trends in the data
multiplier effect
allows each dollar of government spending to expand aggregate output by a multiple of the amount spent. Changes in government spending have a larger multiplier than changes in taxes.
fractional reserve banking system,
banks accept deposits and hold only a certain portion in reserves, loaning out the rest.
In the short run, changes in the money supply will NOT change output according to: Keynesian monetary theory classical economists monetarists classical economists and monetarists
classical economists
Which of the following is NOT a financial intermediary in the loan banks mutual funds corporations insurance companiesable funds market model?
corporations
M1 =
currency (banknotes and coins) and demand deposits (checking accounts).
market for loanable funds
describes the financial market for saving and investment. Savers provide more funds to the loanable funds market as interest rates increase. Firms demand more funds for investment opportunities as interest rates fall.
Inflation was about 5.5% in the middle of 2008 but had fallen to near zero by the end of the year. This is an example of: hyperinflation. deflation. disinflation. price level.
disinflation
The natural rate of unemployment is the rate at which all unemployment is either structural or: underemployment. undefined. frictional. cyclical.
frictional
Kelly is an adjunct professor of economics at a junior college. She recently landed a tenure-track position at a four-year college beginning next fall. She plans not to teach any classes over the summer. This period of unemployment during the summer is considered to be: frictional unemployment. cyclical unemployment. part-time unemployment. structural unemployment.
frictional unemployment.
Monetary policy involves all of these EXCEPT: increases in buying securities. increases in personal taxes. increases in bank reserves. increases in interest rates.
increases in personal taxes
A lower reserve requirement: further limits deposit creation. lowers the money multiplier. restricts the borrowing capability of borrowers. increases the ability of banks to make loans.
increases the ability of banks to make loans.
Federal Reserve System
is the central bank of the United States. It was established by the Federal Reserve Act of 1913 and is required by law to promote economic growth accompanied by full employment, stable prices, and moderate long-term interest rates.
money multiplier
is the maximum amount the money supply can increase (or decrease) when a dollar of new deposits enters (or exits) the system.
Since March 2008, the federal funds rate has been: Please choose the correct answer from the following choices, and then select the submit answer button. equal to the prime rate. equal to 0%.. less than the prime rate. higher than the prime rate
less than the prime rate
. Generally, economists believe that monetary policy should focus on price stability in the _____ run and output or income in the _____ run. long; long short; short long; short short; long
long;short
equation of exchange
m*v=P*q velocity money supply output q prices
. In a liquidity trap: fiscal policy is ineffective in changing income and output. monetary policy is somewhat effective in changing income and output in the short run. monetary policy is ineffective in changing income and output. monetary policy is very effective in changing income and output.
monetary policy is ineffective in changing income and output.
Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot. Since he is old enough to be eligible for his pension, he decides to retire and devote himself to caring for his elderly parents. According to the Bureau of Labor Statistics, Jordan is: unemployed. employed. not in the labor force. a discouraged worker.
not in the labor force
The main tool of monetary policy is: the reserve requirement. capital gains taxes. the discount rate. open market operations.
open market operations
Expansionary fiscal
policy includes increases in government spending or transfer payments, or reducing taxes. The effect is a shift of the AD curve to the right, increasing prices and aggregate output.
Contractionary fiscal
policy includes reducing government spending or transfer payments, or raising taxes. The effect is a shift of the AD curve to the left, decreasing prices and aggregate output.
In the equation of exchange, if M = $1.5 trillion, V = 7, and P = 1.05, then: Q = $10 trillion. Q = $10.5 trillion. nominal GDP is $10 trillion. real GDP is $10.5 trillion.
q=$10 trillion
Financial institutions: reduce information costs, reduce transaction costs, and pool funds from lenders. reduce information costs, reduce transaction costs, and diversify assets. pool funds from lenders, reduce transaction costs, and diversify assets. reduce information costs, set interest rates for bonds, and diversify assets
reduce information costs, reduce transaction costs, and diversify assets.
Which of the following is an example of contractionary fiscal policy? building a new interstate highway increasing federal spending to renovate college campuses reducing military spending sending taxpayers a $600 rebate
reducing military spending
A reduction in the interest rate causes consumption and investment to _____, which shifts the aggregate demand curve _____. fall; rightward rise; leftward fall; leftward rise; rightward
rise;rightwward
In the loanable funds market model, the supply curve represents: Please choose the correct answer from the following choices, and then select the submit answer button. spenders. savers. buyers borrowers.
savers
Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered: frictionally unemployed. structurally unemployed. cyclically unemployed. not in the labor force.
structurally unemployed.
13.9 The nineteen member nations that form the Eurozone share a monetary policy set by the European Central Bank (ECB). In recent years, ECB has used aggressive monetary policy actions to prevent the effects of financial crises in individual nations from engulfing the entire region.
t
A T-account is a simple balance sheet showing a bank's assets (money the bank claims) on the left side and liabilities (money the bank owes) on the right side.
t
A bank can continue to make loans as long as its reserve ratio, calculated as its reserves as a percentage of its total customer deposits, is greater than the reserve requirement. Reserve Ratio = Reserves/Customer Deposits
t
A surplus occurs when tax revenues exceed government spending. The national debt is the accumulation of all past deficits less surpluses. The public debt is the portion of the national debt that is held by the public.
t
Alternative to money targeting is inflation targeting: implementing policy to keep inflation at about 2% to faciliate long-term economic growth
t
The U.S. financial crisis in 2008 created a major challenge to the Fed, which had lowered the federal funds rate to near 0% but still faced an economy in deep recession. To continue expansionary monetary policy with interest rates at 0%, the Fed engaged in various quantitative easing strategies, including purchasing long-term assets from banks to expand the monetary base.
t
In the long run, what happens to the aggregate price level when the Fed increases reserve requirements? Please choose the correct answer from the following choices, and then select the submit answer button. The aggregate price level rises and then falls. The aggregate price level rises. The aggregate price level does not change. The aggregate price level falls.
the aggregate price level falls
What happened to inflation rates during Paul Volcker's time as Federal Reserve chair?
the decreased
When the long-run aggregate supply curve is drawn as a vertical line, the theorist is assuming that: the economy is stagnating at a low level of growth. the economy tends to produce stable prices in the long run. shifting aggregate demand can change the level of employment in the long run. the economy tends to move toward full employment in the long run
the economy tends to move toward full employment in the long run.
Which of the following is NOT one of the criticisms of the Fed's actions leading up to and during the financial crisis? Please choose the correct answer from the following choices, and then select the submit answer button. The Fed overstepped its authority by exercising powers it did not have. The Fed kept interest rates low for too long. The Fed took too long to recognize the problem.. The Fed's monetary policy drastically increased prices shortly after the crisis.
the feds monetary policy drastically increased prices shortly after the crisis
If the reserve requirement is 15%,
the money multiplier = 1/0.15 = 6.67.
The gross public debt is held by: Please choose the correct answer from the following choices, and then select the submit answer button. foreign governments only. the public, including foreign governments, and some U.S. government agencies. U.S. government agencies only. the U.S. public only.
the public, including foreign governments, and some U.S. government agencies.
Tara lost her job at a General Motors plant a month ago and never started looking for another job. Her bosses assured her that the plant would open back up in about another month. The Bureau of Labor Statistics would classify her as: marginally attached. unemployed. underemployed. a discouraged worker.
unemployed.
The use of money as a medium of exchange helps reduce the inefficiencies inherent in: an inflationary period. unstable commodity values. a time of political uncertainty. a barter economy.
a barter economy.
Which is NOT one of the three basic functions of money? a means to collect taxes a unit of account a medium of exchange a measure of value
a means to collect taxes
Tradeoff Between Risk and Return:
The greater the risk involved, the higher the average annual return on investment.
discount rate
The interest rate the Federal Reserve charges commercial banks and other depository institutions to borrow reserves from a regional Federal Reserve Bank.
Taylor rule:
Used to approximate the Fed's actions on interest rates based on economic conditions: