chapter 9 and 10 , 11 macro

If Sara Saver earns a 7% interest rate on her savings when the rate of inflation is 3%, her real interest rate is: a.10 percent b.7 percent c.4 percent d.3 percent

4%

Currency: a.is the most basic measure of the money supply b.consists of the coins and paper money issued by the federal government c.Both of the above d.Neither of the above

c.Both of the above

During an inflationary gap: a.individual income tax payments will increase, acting as an automatic stabilizer b.unemployment compensation payments will decrease, acting as an automatic stabilizer c.Both of the above d.Neither of the above

c.Both of the above

M1 includes: a.checkable deposits b.currency in circulation c.Both of the above d.Neither of the above

c.Both of the above

The functions of the Fed include: a.controlling the money supply b.supplying the economy with currency c.Both of the above d.Neither of the above

c.Both of the above

Which of the following would be contractionary fiscal policy? a.a decrease in the money supply b.a decrease in taxation c.a decrease in government expenditures d.All of the above

c.a decrease in government expenditures

The Fed can increase the money supply by: a.raising the discount rate b.raising the required-reserve ratio c.buying U.S. government securities in the open market d.All of the above

c.buying U.S. government securities in the open market

Automatic stabilizers: a.tend to decrease the budget deficit during a recessionary gap b.tend to decrease the budget surplus during an inflationary gap c.do not require any legislative change in fiscal policy d.All of the above

c.do not require any legislative change in fiscal policy

When a bank borrows from other banks, the interest rate charged is the: a.discount rate b.prime rate c.federal funds rate d.bank rate

c.federal funds rate

Money is valuable because: a.it is very expensive to print b.it is backed by gold c.it is generally accepted as a medium of exchange d.All of the above

c.it is generally accepted as a medium

The most important function of money is: a.store of value b.measure of value c.medium of exchange d.valuable resource

c.medium of exchange

Increases in checkable deposits made possible by fractional reserve banking is: a.counterfeiting b.money laundering c.money creation d.open market operations

c.money creation

According to Keynesian theory, during a recessionary gap the government's budget: a.should be balanced b.should be in surplus c.should be in deficit

c.should be in deficit

The key person in establishing monetary policy in the U.S. is: a.the Comptroller of the currency b.the Chair of the House Ways and Means Committee c.the Chair of the Federal Reserve Board of Governors d.the Secretary of the Treasury

c.the Chair of the Federal Reserve Board of Governors

Crowding out: a.occurs when increases in government spending lead to decreases in private spending b.will affect mainly consumption if increased government spending is paid for with increased taxes c.will affect mainly investment if increased government spending is paid for with deficit spending d.All of the above

d.All of the above

Using money to make an exchange: a.eliminates the need for a double coincidence of wants b.reduces the transaction costs of making exchanges c.increases specialization and trade d.All of the above

d.All of the above

The direct exchange of goods: a.is barter b.requires a double coincidence of wants c.is easier than making a trade using money d.Both a. and b. above

d.Both a. and b. above

According to Keynesian theory: a.if Total Expenditures is less than the ideal; the result will be a recessionary gap b.if Total Expenditures are greater than the ideal, the result will be a recessionary gap c.the government may be able to move the level of Total Expenditures toward the ideal level by using fiscal policy d.Both a. and c. above

d.Both a. and c. above

Open market operations: a.is the Fed acting as lender of last resort for banks b.is the Fed buying and selling U.S. government securities in the open market c.is the Fed's most important monetary policy tool d.Both b. and c.

d.Both b. and c.

To meet its reserve requirements, a bank may count as reserves: a.the value of its buildings b.its vault cash c.its deposit with the Fed d.Both b. and c. above

d.Both b. and c. above

When we hold money for later use: a.we are using it as a measure of value b.we are using it as a store of value c.we may lose buying power if there is inflation d.Both b. and c. above

d.Both b. and c. above

During a recessionary gap: a.corporate income tax payments will increase, acting as an automatic stabilizer b.unemployment compensation payments will decrease, acting as an automatic stabilizer c.Both of the above d.Neither of the above

d.Neither of the above

Since Keynesian theory was introduced in 1936: a.expansionary fiscal policy has proven too politically unpopular to use b.the federal government has had budget surpluses in most years c.Both of the above d.Neither of the above

d.Neither of the above

Which of the following is correct? a.A credit card is money b.Making a purchase using a credit card is just like making a purchase with currency c.Both of the above d.Neither of the above

d.Neither of the above

An increase in the rate of inflation: a.decreases the real interest rate earned on savings b.increases the buying power of people who hold money c.increases uncertainty, thus encouraging investment d.All of the above

a.decreases the real interest rate earned on savings

When a bank borrows from the Fed, the interest rate charged is the: a.discount rate b.prime rate c.federal funds rate d.bank rate

a.discount rate

One-shot inflation: a.is a one-time increase in the price level b.can be caused by a decrease in AD c.can be caused by an increase in SRAS d.All of the above

a.is a one-time increase in the price level

The functions of the Fed include: a.serving as the lender of last resort b.minting coins c.Both of the above d.Neither of the above

a.serving as the lender of last resort

Changes in fiscal policy affect: a.the government's budget b.the money supply c.Both of the above d.Neither of the above

a.the government's budget

When the Fed makes a purchase: a.the monetary base increases b.the monetary base decreases c.the monetary base doesn't change d.All of the above are possible

a.the monetary base increases

A bank in need of reserves: a.will usually borrow from the Federal Reserve System b.as a last resort, may borrow reserves from other banks c.Both of the above d.Neither of the above

a.will usually borrow from the Federal Reserve System

If Sara Saver earns an 8% interest rate on her savings when the rate of inflation is 5%, her real interest rate is: a.2 percent b.3 percent c.5 percent d.13 percent

b.3 percent

Which of the following would be expansionary fiscal policy? a.an increase in the money supply b.a decrease in taxation c.a decrease in government expenditures d.All of the above

b.a decrease in taxation

Fiat money: a.is money that is also a valuable commodity b.is valuable if it is generally accepted as a medium of exchange c.Both of the above d.Neither of the above

b.is valuable if it is generally accepted as a medium of exchange

Whatever is generally accepted as a medium of exchange is: a.barter b.money c.a resource d.All of the above

b.money

The ______________ lag occurs because enacting a change in fiscal policy takes time: a.information b.policy c.impact d.putting

b.policy

If the Fed raises the reserve ratio: a.banks would have excess reserves b.the money supply would decrease c.Both of the above d.Neither of the above

b.the money supply would decrease

When the government's expenditures are greater than tax revenues: a.the budget is balanced b.there is a budget deficit c.there is a budget surplus d.All of the above are possible

b.there is a budget deficit

If the Fed buys U.S. government securities in the open market: a.bank reserves will increase b.monetary base will decrease c.the money supply will decrease d.All of the above

bank reserves will increase