ECON 1500 Final exam (minus Ch. 9)
In the Schechter Poultry case A. The Federal Government was denied its attempt to tell the Schechter brothers how to conduct their business B. The Supreme Court changed its historical position on the Due Process Clause C. The Supreme Court confirmed that the Federal Government could set wage levels in New York City D. All of the above are correct
A. The Federal Government was denied its attempt to tell the Schechter brothers how to conduct their business
Everything else remaining the same as government spending increases A. The trade deficit will increase B. Private savings will increase C. The trade deficit will decrease C. Both B and C are correct
A. The trade deficit will increase
According to T. Bowles, just as the Great Depression of the 1930s led to important U.S. Supreme Court decisions, litigation surrounding the Covid-19 pandemic will likely add to the body of important U.S. Supreme Court cases defining the powers of the Federal and state governments. A. True B. False
A. True
CARES III, which was passes in March 2021, received how many votes from Republicans in the Senate and House, combined? A. Zero. B. Two. C. Three. D. Twenty.
A. Zero.
Crowding out is associated with: A. a decrease in investment resulting from an increase in government borrowing and higher interest rates B. an increase in investment resulting from an increase in government borrowing and higher interest rates C. an increase in savings caused by higher future tax when government increases borrowing D. a decrease in government spending caused by a shortage of available credit
A. a decrease in investment resulting from an increase in government borrowing and higher interest rates
To be true, the Ricardian equivalence theorem requires two assumptions, which are that individuals: A. believe deficits will result in higher future taxes and consequently save more now B. believe deficits will result in lower future taxes and consequently save more now C. cannot recognize the link between deficits and future taxes and cannot recognize the level of potential output D. All of the above are correct
A. believe deficits will result in higher future taxes and consequently save more now
If the Fed wants to increase the money supply, it can: A. buy government securities. B. sell government securities. C. pass a law that interest rates rise. D. pass a law that interest rates fall.
A. buy government securities.
To decrease the money supply, the Fed can: A. conduct open market sales. B. decrease the reserve requirement.. C. decrease the discount rate. D. Both B and C are correct.
A. conduct open market sales.
If the federal government has a budget surplus in a given year, the national debt will: A. decrease B. remain constant C. increase only if output is below potential output D. increase
A. decrease
According to the Ricardian equivalence theorem, people increase savings today when the government increases deficits because they recognize that: A. government deficits imply higher future taxes B. government deficits imply lower future taxes C. consumption reduces future taxes D. consumption increases future taxes
A. government deficits imply higher future taxes
Assume Eve has 10 pounds of gold and issues 10 notes on animal skins which promises a pound of gold to the holder of the note. Eve is A. issuing fiat money. B. engaging in fractional reserve banking. C. applying a reserve requirement of 10 percent. D. All of the above are correct.
A. issuing fiat money
Paying off the external public debt (i.e., the Treasury buying back outstanding bonds) involves a: A. net reduction in domestic wealth B. redistribution of wealth among citizens of the country C. net increase in domestic wealth D. redistribution of wealth among citizens of other countries
A. net reduction in domestic wealth
Assuming an economy is initially at potential output, in the long run, expansionary monetary policy is expected: A. not to affect output in the long run. B. not to affect output in either the short run or the long run. C. to affect output, but only in the long run. D. to affect output in both the short run and the long run.
A. not to affect output in the long run.
When the government runs a deficit, interest rates tend to: A. rise B. fall C. remain unchanged D. fall and then rise
A. rise
If the economy falls into a recession, automatic stabilizers will cause: A. tax receipts to fall and government spending to rise B. tax receipts to rise and government spending to fall C. both tax receipts and government spending to rise D. both tax receipts and government spending to fall
A. tax receipts to fall and government spending to rise
Expansionary monetary policy is most likely to: A.decrease interest rates and increase AD, with a tendency to stimulate the economy. B. increase interest rates and increase AD, with a tendency to stimulate the economy. C. increase interest rates, reduce investment, and decrease AD. D. decrease interest rates, reduce investment, and increase AD.
A.decrease interest rates and increase AD, with a tendency to stimulate the economy.?
Previous to the Covid Pandemic, the actual deficit was _______ , the cyclical deficit was__________, and the structural deficit was_________. A.large; zero; equal to the actual B. large; large; large C. zero; large; zero D. large; equal to the actual ; zero
A.large; zero; equal to the actual
In West Coast Hotel v. Parrish (1937), The Supreme Court's ruling: A. Was consistent with previous Supreme Court rulings on the issue of Freedom of Contract under the Due Process Clause B. Expanded the ability of state governments to regulate economic activity. C. Turned on the courts interpretation of the Commerce Clause D. None of the above are correct
B. Expanded the ability of state governments to regulate economic activity.?
The Supreme Court's ruling in the West Coast Hotel case, A. Fundamentally changed the direction of constitutional law on the power of government to intervene in the economy B. Limited the set of private employer actions previously deemed protected under the theory of Freedom of Contract C. Turned on the Courts interpretation of the Due Process Clause D. All of the above are correct
D. All of the above are correct
U.S. Government budget deficits A. Likely decrease investment B. Require the U.S. Treasury to sell bonds C. Likely increase interest rates D. All of the above are correct
D. All of the above are correct
In response to the Covid Pandemic, the Fed has: A.Pursued expansionary monetary policy. B. Purchased an unusually large amount of government securities. C. Consistently conducted open market purchases. D. All of the above are correct.
D. All of the above are correct.
On the COVID relief bills, Professor Bowles is of the opinion that: A. CARES I and II likely helped the economy move closer to potential output. B. The corresponding debt comes at a bad time and is concerning for future generation. C. CARES III may have been unnecessary and poses a risk of inflation. D. All of the above are correct.
D. All of the above are correct.
On the Federal Reserves' response to COVID-19, Professor Bowles is of the opinion that: A. It is contributing to price bubbles in certain markets. B. It is essentially creating money to pay for the Federal Government's spending, which poses and inflation risk C. It has kept interest rates artificially too low for too long, going back to the 2008 Financial Crisis. D. All of the above are correct.
D. All of the above are correct.
The Federal Government's response to the Covid Pandemic: A. Rather dramatically increased the public debt. B. Rather dramatically increased the budget deficit for 2020 and 2021. C. Likely helped the economy move back to (or close to) potential output quickly. D. All of the above are correct.
D. All of the above are correct.
The financial sector A. Facilitates saving and investment B. Makes saving easier. C. Promotes investment. D. All of the above are correct.
D. All of the above are correct.
The total Federal Government Debt: A. Is larger than the U.S. annual GDP. B. As of March 2021,, was approximately $28.0 trillion. C. Has grown sharply over since 2008. D. All of the above are correct.
D. All of the above are correct.
Which is/are true concerning the Federal Government's response to the COVID-19 Pandemic? A. Three major relief packages passed: March 2020, December 2020, and March 2021. B. An increase in spending totaling approximately $5.0 trillion dollars. C. An increase in spending totaling approximately 140 percent of total 2019 revenue. D. All of the above are correct.
D. All of the above are correct.
The Commerce Clause: A. Has been interpreted to prevent state governments from imposing tariffs on other states B. Provides the Federal Government the power to regulate interstate trade C. Does not address the ability of a state government to regulate intrastate trade D. All of the above correct
D. All of the above correct
Which of the following is a typical bank asset? A. Customer demand deposits. B. Reserves. C. Loans to customers. D. Both (B) and (C) are correct.
D. Both (B) and (C) are correct
If national saving is negative, A. There will be a trade deficit B. Imports will exceed exports C. Exports will exceed imports D. Both A and B are correct
D. Both A and B are correct
Which of the following is (are) true: A. The individual states created the Federal Government. B. The 14th amendment's due process clause limits state police powers. C. When in conflict, state government police powers typically have supremacy over the Due Process clause of the U.S. Constitution. D. Both A and B are correct but not C.
D. Both A and B are correct but not C.
Assume Eve has 10 pounds of gold and issues 100 notes on animal skins which promises a pound of gold to the holder of the note. Eve is A. issuing commodity money. B. engaging in fractional reserve banking. C. applying a reserve requirement of 10 percent. D. Both B and C are correct.
D. Both B and C are correct
Everything else remaining the same, as consumption decreases A. The trade deficit will increase B. Private savings will increase C. The trade deficit will decrease D. Both B and C are correct
D. Both B and C are correct
When the U.S. Government runs a deficit, the A. Fed has to buy bonds to finance the deficit B. Treasury has to sell bonds to finance the deficit C. Federal government tax revenues must be less than Federal government spending D. Both B and C are correct
D. Both B and C are correct
If a Zions Bank needs reserves, it can A. Borrow from Wells Fargo at the discount rate. B. Borrow from the Fed at the discount rate. C. Borrow from Wells Fargo at the Federal Funds rate. D. Both B and C are correct.
D. Both B and C are correct.
When the Fed purchases government securities, A. The liability side of its balance sheet decreases. B. The money supply increases. C. The asset side of its balance sheet increases. D. Both B and C are correct.
D. Both B and C are correct.
Which is not a function of the Fed? A. Conducting monetary policy. B. Serving as a lender of last resort. C. Providing financial services such as check clearing to commercial banks. D. Directly financing U.S. budget deficits.
D. Directly financing U.S. budget deficits.
Suppose total deposits in the First Bank of Commerce are $100,000 and required reserves are $10,000. Based on this information, the required reserve ratio is: A) 0.10. B) 0.9. C) 1.0. D) 10.0.
A) 0.10.
Which of the following Fed actions increases the money supply? A. Decreasing loans made to banks by increasing the discount rate. B. Decreasing the Federal Funds rate by buying government securities in the open market. C. Selling government securities in the open market. D. Increasing reserve requirements.
B. Decreasing the Federal Funds rate by buying government securities in the open market.
If the reserve ratio is 0.20, the money multiplier is: A) 4.0. B) 5.0. C) 20.0. D) 25.0.
B) 5.0.
From April 2020 to February 2021, the U.S. recovered approximately how many full-time jobs? A. 10.5 million B. 14.5 million C. 17.0 million D. 20.0 million
A. 10.5 million
Assume the Federal Government orders all restaurants closed for four weeks. Which if the following would most likely provide a basis for the U.S. Government's claim that it has the power to issue such an order? A. Commerce Clause B. Due Process Clause C. 1st Amendment. D. 2nd Amendment.
A. Commerce Clause
The Federal Reserves' response to the COVID-19 Pandemic is best characterized as: A. Expansionary. B. Contractionary C. Classical. D. Laissez faire.
A. Expansionary.
Money A. Facilitates trade and specialization B. Discourages saving. C. Discourages investment. D. All of the above are correct.
A. Facilitates trade and specialization
The group that is comprised of five presidents of the 12 regional Federal Reserve Banks and seven Federal Reserve Board of Governors that gathers around a table to discuss whether to increase interest rates is the: A. Federal Open Market Committee. B. Federal Depository Insurance Corporation. C. Federal Advisory Council. D. National Federal Reserve Bank.
A. Federal Open Market Committee.
Which is correct concerning the Federal Reserves' response to the COVID-19 Pandemic? A. For the second time in 12 years, it has dramatically increased the money supply. B. The Federal Funds rate has been much higher for the past 20 years than for earlier periods. C. The Federal Reserve has announced that it will raise the Federal Funds rate by the end of the year. D. All of the above.
A. For the second time in 12 years, it has dramatically increased the money supply.
In response to the Covid Pandemic, in 2020, the U.S. Government: A. Implemented aggressive functional finance principles. B. Implemented aggressive sound finance principles. C. Decreased government spending to match the decrease in tax revenue. D. Attempted to reduce the public debt.
A. Implemented aggressive functional finance principles.
A sophisticated financial sector, A. Is associated with high income nations. B. Will typically be associated with low investment rates. C. Is a small sector of the U.S. economy. D. All of the above are correct.
A. Is associated with high income nations.
Which of the following Fed policies would be appropriate in a recessionary gap? A. Open market purchases to lower the Federal Funds rate. B. Raise the reserve requirement. C. Raise the discount rate. D. All of the above.
A. Open market purchases to lower the Federal Funds rate.
M1 includes which of the following? A) Time deposits B) Checking account deposits C) Gold certificates D) Money market mutual funds
B) Checking account deposits
Which institutions can create money? A) The government and its agencies B) The Fed with an assist from banks C) Mutual funds and retirement funds D) Households and corporations
B) The Fed with an assist from banks
Which if the following would most likely provide a basis for a private restaurant's lawsuit against the State of Utah claiming the State does not have the power to order it closed? A. Commerce Clause B. Due Process Clause C. 1st Amendment. C. 2nd Amendment.
B. Due Process Clause
As of March 2021, the actual deficit was _______ , the cyclical deficit was__________, and the structural deficit was_________. A. large; zero; equal to the actual. B. Exceptionally large by any standard; large; large C. zero; large; zero D. large; equal to the actual ; zero.
B. Exceptionally large by any standard; large; large
For fiscal years 2019, 2020, and 2021, the federal budget deficit is or is expected to be approximately (in trillion dollars): A. $0.5, $1.0 $1.5. B. $1.0, $3.1, $4.0. C. $1.0, $3.0, $1.0 D. $0.0, $2.0, $4.0
B. $1.0, $3.1, $4.0.
Assume COVID bank has a reserve requirement of 50 percent and no excess reserves. If a new customer, Amy B., deposits $100 million, the bank can make a maximum new loan of: A. $10 million. B. $50 million. C. $90 million. D. $100 million.
B. $50 million.
If the reserve requirement is 100 percent, and banks keep no excess reserves, a new deposit of $2,000 will add _________ to the money supply: A. Zero B. 2,000 C. $20,000 D. $200,000
B. 2,000
2020_Q2 GDP was what percent of 2019_Q4 Real GDP? A. 88 percent B. 90 percent C. 98 percent D. 102 percent
B. 90 percent
Which is not a tool of monetary policy? A. Change the discount rate. B. Change the prime rate. C. Change of reserve requirement. D. Open market purchases.
B. Change the prime rate.
If the Federal Funds rate begins to rise above the current range established by the Federal Reserve, the Fed would: A. Conduct open market sales. B. Conduct open market purchases. C. Raise the discount rate. D. Raise the reserve requirement.
B. Conduct open market purchases.
Justice Clarence Thomas: A. Has argued that the Supreme Court ruled correctly in Wickard v. Filburn (1942) B. Has argued that the Courts ruling in Wickard v. Filburn (1942) "undid the Framers' original structure of limited government powers." C. Issued a Dissenting Opinion in the Wickard v. Filburn (1942) D. None of the above are correct
B. Has argued that the Courts ruling in Wickard v. Filburn (1942) "undid the Framers' original structure of limited government powers."
Funds in your checking account: A. Would be included in your list of liabilities B. Is a medium of exchange C. Is commodity money D. All of the above are true
B. Is a medium of exchange
The Federal Government's response to the COVID-19 Pandemic is best characterized as: A. Laissez faire. B. Keynesian. C. Classical. D. Bidenesque.
B. Keynesian.
U.S. external public debt corresponds to Treasury bonds (i.e., government securities) owned by: A. U.S. citizens B. Non U.S. citizens (i.e., foreigners) C. The Social Security Trust Fund D. The Clinton Foundation
B. Non U.S. citizens (i.e., foreigners)
Paying off the internal public debt (i.e., the Treasury buying back outstanding bonds) involves a: A. net reduction in domestic wealth B. Redistribution of wealth among citizens of the country C. net increase in domestic wealth D. redistribution of wealth among citizens of other countries
B. Redistribution of wealth among citizens of the country
Which combination would most likely pass constitutional scrutiny? A. Federal mandate based on general police powers that all individuals wear a mask in public. B. State of Utah mandate based on general police powers that all individuals in Utah wear a mask in public. C. State of Utah mandate based on general police powers that all individuals in the U.S. wear a mask in public. D. Federal mandate based on the Commerce Clause that all individuals wear a mask in public.
B. State of Utah mandate based on general police powers that all individuals in Utah wear a mask in public.
In Schechter Poultry v. U.S. (1935), A. The Federal Government was allowed to tell the Schechter brothers how to conduct their business B. The Supreme Court confirmed that the Federal Government could not regulate intrastate commerce C. The Supreme Court confirmed that the Federal Government could not regulate interstate commerce D. Both A and C are correct
B. The Supreme Court confirmed that the Federal Government could not regulate intrastate commerce
From whence do Government Securities originate? A. The U.S. Treasury as a result of budget surpluses. B. The U.S. Treasury as a result of budget deficits. C. The Federal Reserve as a result of Open Market Purchases. D. The Federal Reserve as a result of Open Market Sales.
B. The U.S. Treasury as a result of budget deficits.
Unemployment compensation is: A. an automatic stabilizer because it rises as income increases, slowing an economic expansion B. an automatic stabilizer because it falls as income increases, slowing an economic expansion C. an automatic stabilizer because it falls as income decreases, slowing an economic contraction D. not an automatic stabilizer
B. an automatic stabilizer because it falls as income increases, slowing an economic expansion
When the Fed sells government securities, the money supply: A. expands. B. contracts. C. sometimes rises and sometimes falls. D. Selling government securities does not affect the money supply.
B. contracts.
To increase the money supply, the Fed can: A. increase the required reserve ratio. B. decrease the discount rate. C. increase the discount rate. D. sell bonds.
B. decrease the discount rate.
Fine tuning the economy with fiscal policy is: A. relatively simple because the government has access to the best information available B. difficult because the government lacks important information about the economy C. relatively simple because the political process usually works smoothly and without significant lags D. difficult because economists are generally a dumb bunch
B. difficult because the government lacks important information about the economy
The view that the government should increase government spending as necessary to combat a recession is: A. public finance B. functional finance C. Ricardian equivalence D. sound finance
B. functional finance
A bank has a reserve requirement of 0.10. If it has demand deposits of $100,000 and is holding $5,000 in reserves: A. all the bank's reserves are excess reserves. B. the bank is not meeting its reserve requirement. C. the bank is holding $2,000 in excess reserves. D. the bank is in a position to make a new loan.
B. the bank is not meeting its reserve requirement.
Which of the following is most representative of the functional finance view? A. The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way B. Budgets should be balanced. Doing otherwise is morally wrong C. The government should use tax and spending policy to help stabilize the economy D. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective
C. The government should use tax and spending policy to help stabilize the economy
A claim by the State of Utah that it has the power to order private restaurants to close down is best supported by A. The Commerce Clause of the U.S. Constitution. B. The 5th and 14th Amendments of the U.S. Constitution. C. The notion of Police Powers and the 10thAmendment of the U.S. Constitution. D. The 2nd Amendment of the U.S. Constitution.
C. The notion of Police Powers and the 10thAmendment of the U.S. Constitution.
When the U.S. Government pays interest on its internal debt owned by the Fed, A. U.S. national income rises B. U.S. national income falls C. U.S. national income does not change D. U.S. national wealth rises
C. U.S. national income does not change
When a bank loans out excess reserves, the money supply: A. does not increase. B. decreases. C. increases. D. may increase or decrease depending on how the loan is used.
C. increases.
From a functional finance perspective, when the economy is in an inflationary gap the government should: A. do nothing B. run a deficit C. run a surplus D. run a balanced budget
C. run a surplus
Using fiscal policy to stabilize the economy is difficult because: A. potential output is known B. the effects of a change in G is known with certainty C. there are time lags involved in the use of fiscal policy D. the size of the government doesn't matter
C. there are time lags involved in the use of fiscal policy
The Commerce Clause has been interpreted to: A. Grant authority to the Federal Government to regulate interstate commerce. B. Restricts states, through the notion of the Dormant Commerce Clause, from interfering with interstate commerce. C. Prohibit the Federal Government from regulating intrastate commerce D. All of the above are correct
D. All of the above are correct
If the reserve requirement is 10 percent, and banks keep no excess reserves, a new deposit of $2,000 will add _________ to the money supply: A. Zero B. 2,000 C. $20,000 D. $200,000
C. $20,000
Suppose total deposits in COVID Bank are $50,000 and required reserves are $25,000. Based on this information, the required reserve ratio is: A. 0.10. B. 0.20. C. 0.50. D. 2.0.
C. 0.50
Which Amendment of the U.S. Constitution provides for police powers reserved to the individual states? A. 1st B. 5th C. 10th D. 14th
C. 10th
From December 2019 to April 2020, the U.S. lost approximately how many full-time jobs? A. 6.5 million B. 14.5 million C. 17.0 million D. 20.0 million
C. 17.0 million
2020_Q4 GDP was what percent of 2019_Q4 Real GDP? A. 88 percent B. 90 percent C. 98 percent D. 102 percent
C. 98 percent
In terms of the AS-AD model, the COVID-19 recession is best thought of as caused by: A. A shift left of the SAS curve. B. A shift left of the AD curve. C. A combination of a decrease in supply and a decrease in demand. D. A shift right of LAS
C. A combination of a decrease in supply and a decrease in demand.
Experience has shown that Keynesian, activist fiscal policies likely: A. Are the source of all that is good and righteous B. Are of the Devil C. Are a reason the U.S has a large public debt D. usually produce budget surpluses
C. Are a reason the U.S has a large public debt
All three COVID-19 relief bills included: A. An increase in the federal minimum wage. B. Approximately $360 billion subsidy to state governments. C. Direct payments to individuals. D. Forgiveness of student debt.
C. Direct payments to individuals.
The Federal Reserves' response to the COVID-19 Pandemic includes: A. Driving the 20-year Treasury bond rate to essentially zero. B. Dramatically decreasing the money supply C. Dramatically increasing the money supply D. All of the above.
C. Dramatically increasing the money supply
Trade deficits are, at least in part, caused by A. Lack of comparative advantage B. Federal budget surpluses C. Federal budget deficits D. The West Coast Elites
C. Federal budget deficits
A key difference between functional finance and sound finance is that in the sound finance view the government should: A. Use its power of spending to end recessions B. Use its power of spending to end inflationary gaps C. Follow a policy of laissez faire with respect to recessions D. Take an active role in stabilizing the economy by running budget surpluses
C. Follow a policy of laissez faire with respect to recessions
Fiscal policy typically: A. Can be implemented quickly as Congress will do what the President asks B. Can be implemented quickly as the President can change tax policy on his or her own C. Is difficult to implement quickly due to political issues D. None of the above are correct
C. Is difficult to implement quickly due to political issues
On the Federal Reserves' response to COVID-19, Professor Bowles is of the opinion that: A. It has likely has not helped the economy move closer to potential output. B. The decrease in the money supply comes at a bad time and is concerning for future generation. C. It seems aggressive and poses a risk of inflation. D. All of the above are correct.
C. It seems aggressive and poses a risk of inflation.
According to the Ricardian equivalence theorem, an increase in government spending (G) would: A. Increase aggregate demand as consumer spending would not change B. Decrease aggregate demand as consumer spending would decrease more than the increase in G C. Not change aggregate demand as consumer spending would decrease by the opposite amount as the increase in G D. Not change aggregate demand as household savings would decrease
C. Not change aggregate demand as consumer spending would decrease by the opposite amount as the increase in G
In the Schechter Poultry case, the Court held: A. That all commerce involves interstate commerce B. That the Federal Government had extensive powers to regulate commerce whether interstate or not C. That interstate commerce had to involve interstate commerce. D. All of the above are correct
C. That interstate commerce had to involve interstate commerce.
The concept of Federalism in the U.S. Constitution includes the notion that: A. The State of Utah is not limited by the Bill of Rights. B. The Federal Government reserves all powers not delegated to the states. C. The Federal Government has certain enumerated powers while the states retain police powers. D. All of the above are correct.
C. The Federal Government has certain enumerated powers while the states retain police powers.
The Freedom of Contract Doctrine: A. Held that individuals could contract with each other with minimal interference imposed by government B. Was supported by an interpretation of the Due Process Clause C. Was dealt a serious blow by the Supreme Court's ruling in West Coast Hotel v. Parrish (1937) D. All of the above are correct
D. All of the above are correct
When money is held as an asset, it is serving as a: A) standard of value. B) unit of account. C) medium of exchange. D) store of value.
D) store of value.
Which of the following are creditors of the U.S. government debt as a result of owning U.S., Government Securities? A. Foreign individuals and firms. B. The Federal Reserve. C. Social Security Trust Fund. D. All of the above
D. All of the above
In Wickard v. Filburn (1942), A. The Federal Government won B. The Court's decision turned on the its interpretation of the Commerce Clause C. The Federal Government's ability to regulate the economy was expanded D. All of the above are correct
D. All of the above are correct
Keynesian Economics A. Suggests that deficit spending during a recession is a good thing B. Appears to have provided "cover" for politicians to support deficit spending D. Is likely a reason the U.S. Federal Government has incurred a budget deficit is the great majority of the past 40 years D. All of the above are correct
D. All of the above are correct
If the reserves of the banking system are $2,000 billion, how much money could these reserves support if the required reserve ratio is 0.25 and banks hold no excess reserves? A. $400 billion B. $1,500 billion C. $2,000 billion D. $8,000 billion
D. $8,000 billion
When the Federal Reserve buys government securities to finance deficit spending, A. It is effectively creating money to finance spending. B. The money supply falls. C. The potential cost of this policy is inflation. D. A and C are both correct.
D. A and C are both correct.
The Federal Reserves' response to the COVID-19 Pandemic includes: A. Driving the Federal Funds rate to essentially zero. B. Dramatically decreasing the money supply C. Purchasing exceptionally large, by historical standards, amounts of Government Securities. D. A and C are correct but not B.
D. A and C are correct but not B.
According to T. Bowles, which of the following should be included in any list of great intellectual achievements of the human mind? A. Save today for a better tomorrow. B. A medium of exchange. C. Fiat money D. All of the above.
D. All of the Above
The Commerce Clause: A. Provides state governments the power to impose tariffs on other states B. Provides state governments the power to regulate interstate trade C. Provides the Federal Government the power to regulate intrastate trade D. Has typically been interpreted, since Wickard v. Filburn (1942), in a way to expand the role of the Federal Government in the economy
D. Has typically been interpreted, since Wickard v. Filburn (1942), in a way to expand the role of the Federal Government in the economy
In Wickard v. Filburn (1942), A. Roscoe Filburn won B. Turned on the Supreme Court's interpretation of the Due Process Clause C. The Federal Government's ability to regulate the economy was further restricted based on the Commerce Clause D. None of the above are correct
D. None of the above are correct
The view that the government budget should typically be balanced, primarily based on a moral argument is A. public finance B. fiscal policy C. the Ricardian equivalence D. Sound finance
D. Sound finance
What did the sound finance approach to fiscal policy use to support its view? A. Keynesian economics B. The history of the Great Depression C. The functional finance view D. The Ricardian equivalence theorem
D. The Ricardian equivalence theorem
Which of the following statements is true? A. The debt is a flow measure and the deficit or surplus is a stock measure B. Both the debt and the deficit or surplus are flow measures C. Both the debt and the deficit or surplus are stock measures D. The debt is a stock measure and the deficit or surplus is a flow measure
D. The debt is a stock measure and the deficit or surplus is a flow measure
Many economists would argue that the large government spending bills in response to Covid (e.g., the various CARES Acts), with the possible exception of the March 2021 $1.9 trillion spending bill, were appropriate to prevent: A. an even larger recessionary gap. B. exceptionally high unemployment. C. a socially unacceptable level of poverty. D. all of the above.
D. all of the above.
Currently (October 2021), the target federal funds rate is: A.low in comparison to the 1960 - 2008 period. B. about 6.0 percent. C. less than 1.0 percent. D. both A and C are correct.
D. both A and C are correct.
If the Fed wants to implement expansionary monetary policy, it might: A. sell government securities to increase the federal funds rate. B. sell government securities to reduce the federal funds rate. C. buy government securities to increase the federal funds rate. D. buy government securities to reduce the federal funds rate.
D. buy government securities to reduce the federal funds rate.
In response to Covid, the Fed has: A. Conducted open market sales to increase the money supply. B. Conducted open market purchases to decrease the money supply. C. raised interest rates. D. dramatically increased the value of assets in its balance sheet.
D. dramatically increased the value of assets in its balance sheet.
As the economy expands, tax revenues: A. fall and transfer payments rise, causing the economy to expand by less than it would in the absence of automatic stabilizers B. rise and transfer payments rise, causing the economy to expand by more than it would in the absence of automatic stabilizers C. fall and transfer payments fall, causing the economy to expand by more than it would in the absence of automatic stabilizers D. rise and transfer payments fall, causing the economy to expand by less than it would in the absence of automatic stabilizers
D. rise and transfer payments fall, causing the economy to expand by less than it would in the absence of automatic stabilizers
Open market operations are related to: A. actions taken by the Fed to close weakened banks. B. changes in the reserve requirement. C. changes in the discount rate. D. the Fed's buying and selling of government securities.
D. the Fed's buying and selling of government securities.
