review exam 3

In 2018, foreign ownership of the total public debt of the United States was about

29%

in 2018, the federal reserve and other us (federal) government agencies held about what percentage of the US federal debt?

38%

which of the following is a true statement?

Fiscal policy swung from contractionary to expansionary in 2002.

If the economy is in equilibrium at $400 billion of GDP and the full-employment GDP is $500 billion

GDP will remain at $400 billion unless aggregate expenditures change.

the basic requirement for an item to function as money is that it be

Generally accepted as a medium of exchange

In a mixed open economy, changes in which of the following all effect the equilibrium of GDP in the same direction?

Sa, T, and M

the crowding-out effect of expansionary fiscal policy suggests that

increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.

Investment and saving are, respectively:

injections and leakages

In a recessionary expenditures gap, the equilibrium level of real GDP is at

less than full-employment GDP

Coins held in commercial banks are:

not part of the nation's money supply.

If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:

output would rise

a rightward shift in the aggregated supply curve is best explained by an increase in

productivity

Suppose that the federal government suddenly declared that wheat was to be used as money. What is a possible outcome of that decision?

- The value of the "wheat dollar" would be unstable depending on crop yields from year to year. - Farmers would replace corn and soy crops with wheat. - Wheat would function as money so long as people accept it in exchange for goods and services..

the M2 money supply is composed of

- money market mutual funds held by individuals - savings deposits, including money market deposit accounts - currency held by the public - small time deposits - checkable deposits

State and local governments are limited in their ability to respond to recessions because of

Constitutional and other requirements to balance their budgets

American Recovery and Reinvestment Act of 2009 is a clear example of

Discretionary fiscal policy that made the cyclically-adjusted budget become more negative

the crowding-out effect suggests that

Increases in government spending may reduce private investment

the federal reserve system is an

Independent agency of government

which of the following financial institutions was acquired by Bank of America as a result of the financial crisis of 2007-2008

Merrill Lynch

which of the following best describes the built-in stabilizers as they function in the united states

Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.

The most basic premise of the aggregate expenditures model is that:

The total output produced in the economy depends directly on the level of total spending

which of the following institutions does not provide checkable deposit services to the general public?

U.S. Treasury

an appropriate fiscal policy for a severe recession is

a decrease in tax rates

what does it mean when economists say that homebuyers are "underwater" on their mortgages

buyers owe more on their mortgages than the property is worth

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:

consumption schedule will shift downward by $20 billion.

a change in which of the following factors would shift the aggregated supply curve

government regulation

An increase in expected future income will:

increase aggregate demand

other things equal, a reduction in personal and business taxes can be expected to

increase both aggregate demand and aggregate supply.

If the national incomes of our trading partners increase, then our aggregate demand _____.

increases because net exports increase

In the aggregated expenditures model, which of the following variables is assumed to be independent of real GDP?

savings

an increase in investment spending caused by higher expected rates of return will

shift the aggregate expenditures curve upward and the aggregate demand curve to the right.

contractionary fiscal policy would tend to make a budget deficit become

smaller

A specific reduction in government spending will dampen demand-pull inflation by a greater amount the:

smaller is the economy's MPS.

Money functions as:

store of value, unit of account, medium of exchange

When current government expenditures equal current tax revenues and the economy is achieving full employment:

the cyclically adjusted budget has neither a deficit nor a surplus.

which of the following is not true of the federal reserves banks

they compete with commercial banks in their basic functions