Economics Exam CH 15-16
ow quickly can an increase in government spending increase the gross domestic product?
6 months
An example of contractionary fiscal policy would be
decreasing government spending.
Keynesian economics failed to deal successfully with
high inflation during the 1970s.
The purpose of expansionary fiscal policy is to
increase output.
Which of the following is one way the Federal Reserve Bank serves the government?
selling government securities
In contrast with classical economics, Keynesian economics
takes a broader view of the economy.
Supporters of supply-side economics believe that
taxes have a strong negative influence on economic output.
All of the following are reasons why it is difficult to put balanced fiscal policy into practice EXCEPT
the need for discretionary spending.
What is the cost of money?
the price of the interest rate
When revenues exceed expenditures,
there is a budget surplus.
What type of policy does the Federal Reserve use to counteract an expansion that is causing high interest rates?
tight money policy
Why does a bank sometimes hold excess reserves?
to be sure they can meet their customers' demands
Why does the Federal Reserve alter monetary policy?
to lessen the effect of natural business cycles
How many Federal Reserve Districts are there?
12
What does "lender of last resort" mean with respect to the Federal Reserve?
It will lend money to a bank in a financial emergency.
What happens during a bank run?
More customers withdraw money than the bank has on hand.
The federal budget is put together
by Congress and the White House.
An example of expansionary fiscal policy would be
cutting taxes.
The Office of Management and Budget
is responsible for deciding how much money each government agency receives in the budget.
When you buy a United States Savings Bond, you
loan money to the government.
All of the following are problems associated with high national debt EXCEPT that it
makes investing in treasury bonds, notes, and bills very risky.
