Econ 3

The Federal Reserve uses to definitions of the money supply, M1 and M2, because

M1 is a narrow definition focusing more on liquidity, where as M2 is a broader definition of the money supply

Congress broadened the feds responsibility since

The 1930s as a result of the Great Depression

Which of the following best explains how the Federal Reserve acts to help prevent banking panics

The Fed acts as a lender of last resort, making loans to banks so they can pay off depositors

Which of the following is a reason the US experience larger economic growth than the Soviet union

The US had a greater amount of private property rights and the US had a market economy that allowed for greater entrepreneurship to occur

Monetary policy is defined as:

The actions the Federal Reserve takes to manage the money supply and interest rates

And asset would be usable as a medium of exchange for all the following reasons except

The asset should be a commodity that has intrinsic value

Growth rate of Real GDP

=(Rgdp this year-rgdp last year/rgdp last year)x100

Price stability means

A low and stable inflation rate

Distinguish among money, income, and wealth.

A person's money is the currency held and the checking account balance, income is the earning and wealth is equal to value of assets minus all debt

What is a banking panic

A situation in which many banks experience runs at the same time

Education and healthcare are important for economic growth because

A well educated and healthy workforce has higher productivity

Which of the following is the best example of human capital

A worker gets a college degree

If something is to be considered as money, it has to fulfill

All four functions

Which of the following things above are not included in the M1 definition of the money supply?

C and E

Which of the following best explains the difference between commodity money and fiat money

Fiat money has no value except as money, where as commodity money has value independent of its use as money.

Between 1950 and the mid-1990s the United States experienced a much larger increase in the standard of living than the Soviet Union. This difference can be most attributed to the fact that the US

Had a greater amount of technological change

Money is and imperfect standard of deferred payment because_____causes the value of money to decrease overtime

Inflation

The computation of the average annual growth rate of real GDP

Is more complex when examining data for a long period of time than when examining data for only a few years

The said is said to have a a dual mandate because

Maintaining price stability and high employment are the two most important goals of the said that are explicitly mentioned in the employment act of 1946

The rule of 70

Math formula to calculate # of years it takes real gdp per capita or any othet variable to double. (70/percent=years it takes to double)

Which of the following would be the least desirable candidate to be a good medium of exchange

Milk

Which one of the following is not a function of money

Open market operation

Money serves as a standard of deferred payment when

Payments agreed to today, but made in the future are in terms of money

Money serves as a unit of account when

Prices of goods and services are stated in terms of money

Which of the following is the best measure of the standard of living of the typical person in a country

Real GDP per person

The economy of country Ramblin was hit by a banking crisis which has led to a recession. Jason Wallace, a real estate agent, says that the economy will recover soon because the government is taking various measures to a counter the recession. According to him, the flow of credit will soon return to precrisis levels. His wife Anna Wallace disagrees with him. She says that the situation may not improve soon, given the substantial increase in unemployment. Which of the following, if true, would strengthen Anna's view?

Recent reports indicate that firms in most industries are putting investment plans on hold

Which one of the following is not one of the monetary policy goals of the fed

Reduce income inequality

Which of the following is not true regarding the multiple goals of the fed

The goal of financial markets stability means that the Fed tries to in sure that I set prices, such as stock prices, increase at a very high rate so investors can make more money

India has been able to experience rapid economic growth since 1991 despite for educational and health care systems because

The government scaled back central planning, reduced regulations, and introduced market based reforms

Capital can be differentiated between physical capital and human capital. Human capital is

The knowledge and skills workers acquire from education and training or from their life experiences

The central bank of the country controls the money supply, which equals the currency held by

The public plus their checking account balances

The two key factors that cause labor productivity to increase overtime are

The quantity of capital per hour worked and the level of technology

One of the goals of the Federal Reserve is priced stability. For the Fed to achieve this goal

The rate of inflation should be low, such as 1% to 3%, and should be fairly consistent

What is the best use of the rule of 70 among those listed below

To judge how rapidly real GDP per capita is growing over a long period of time

When Congress established the federal reserve in 1913, it's main responsibility was

To make discount loans to banks suffering from large withdrawals by depositors

When money is acting as a store of value, it allows an individual to

Transfer dollars, and therefore purchasing power, into the future

Maximum sustainable employment means the economy is producing at its potential where

Unemployment includes frictional and structural unemployment