chp 13 &14 set

Fiscal policy attempts to achieve all of the following objectives except​ _

a stable money supply

The main events that can put a bank under stress include all of the following

-wides spread fall in asset prices -significant currency drain -run on the bank

A fall in real GDP that results in a decrease in personal income tax receipts is an example of​

automatic fiscal policy

In the market for bank​ reserves, if the federal funds rate target is higher than the federal funds​ rate, the Fed will take action to​ ________ reserves

decrease of the supply

When an economy is below full employment and the government has a budget​ deficit, that deficit​

exceed structural deficit

An economy is experiencing a recessionary gap. The government can

increase expenditure or cut taxes to increase aggregate demand

Taxes and​ needs-tested spending work as automatic fiscal policy to dampen the business cycle because taxes​ ______ during an​ expansion, and​ needs-tested spending​ ______ during a recession

increase; increase

The Federal Reserve monetary policy goals of maximum employment mean

keeping the unemployment rate close to the natural unemployment rate.

If the demand for reserves is​ unchanged, an increase in the quantity of reserves will

lower the federal funds rate.

The objectives of monetary policy are​

maximum​ employment, stable​ prices, and moderate​ long-term interest rates

Who is responsible for U.S. monetary​ policy? The​ ______ appoints the members and the Chairman of the Board of Governors of the Fed. The​ ______ is responsible for the conduct of monetary policy.

president/ fed

Federal Reserve monetary policy goals include

price level stability

An open market sale of government securities by the Federal Reserve shifts the​ ________ reserves curve​ _______

supply​ of; leftward

How do the​ Fed's monetary policy actions influence the exchange​ rate

the FED influences the change rate by changing the US interest rate differential

A country has been in existence for only two years. In the first​ year, receipts were​ $1.0 million and outlays were​ $1.5 million. In the second​ year, receipts were​ $1.5 million and outlays were​ $2.0 million. At the end of the second​ year, the government had issued debt worth​ __

​$1 million

A decrease in the tax on capital income​ ______ the real interest rate and​ ______ investment and economic growth.

​decreases; increases

Interest rates​ ______ in response to the​ Fed's actions. The​ short-term interest rateslong dash—the federal funds rate and the​ short-term bill ratelong dash—move ​

​fluctuate; closely together

From 2009 through​ 2012, the​ long-term real interest rate paid by the safest U.S. corporations fell from 4 percent to 2 percent. During that same​ period, the federal funds rate was roughly constant at 0.25 percent a year. A fall in the federal funds rate​ ______ the supply of bank loans and the supply of loanable​ funds, and​ ______ the equilibrium real interest rate.

​increases; lowers

Expansionary fiscal policy when the economy is below full employment​ ______ aggregate demand and real​ GDP, and the price level​ ___

​increases; rises

A budget deficit that needs government action to remove it is a​ ______ deficit. A​ ______ deficit will disappear when the economy moves back to full employment

​structural; cyclical