Econ 3
The Federal Reserve uses to definitions of the money supply, M1 and M2, because
M1 is a narrow definition focusing more on liquidity, where as M2 is a broader definition of the money supply
Congress broadened the feds responsibility since
The 1930s as a result of the Great Depression
Which of the following best explains how the Federal Reserve acts to help prevent banking panics
The Fed acts as a lender of last resort, making loans to banks so they can pay off depositors
Which of the following is a reason the US experience larger economic growth than the Soviet union
The US had a greater amount of private property rights and the US had a market economy that allowed for greater entrepreneurship to occur
Monetary policy is defined as:
The actions the Federal Reserve takes to manage the money supply and interest rates
And asset would be usable as a medium of exchange for all the following reasons except
The asset should be a commodity that has intrinsic value
Growth rate of Real GDP
=(Rgdp this year-rgdp last year/rgdp last year)x100
Price stability means
A low and stable inflation rate
Distinguish among money, income, and wealth.
A person's money is the currency held and the checking account balance, income is the earning and wealth is equal to value of assets minus all debt
What is a banking panic
A situation in which many banks experience runs at the same time
Education and healthcare are important for economic growth because
A well educated and healthy workforce has higher productivity
Which of the following is the best example of human capital
A worker gets a college degree
If something is to be considered as money, it has to fulfill
All four functions
Which of the following things above are not included in the M1 definition of the money supply?
C and E
Which of the following best explains the difference between commodity money and fiat money
Fiat money has no value except as money, where as commodity money has value independent of its use as money.
Between 1950 and the mid-1990s the United States experienced a much larger increase in the standard of living than the Soviet Union. This difference can be most attributed to the fact that the US
Had a greater amount of technological change
Money is and imperfect standard of deferred payment because_____causes the value of money to decrease overtime
Inflation
The computation of the average annual growth rate of real GDP
Is more complex when examining data for a long period of time than when examining data for only a few years
The said is said to have a a dual mandate because
Maintaining price stability and high employment are the two most important goals of the said that are explicitly mentioned in the employment act of 1946
The rule of 70
Math formula to calculate # of years it takes real gdp per capita or any othet variable to double. (70/percent=years it takes to double)
Which of the following would be the least desirable candidate to be a good medium of exchange
Milk
Which one of the following is not a function of money
Open market operation
Money serves as a standard of deferred payment when
Payments agreed to today, but made in the future are in terms of money
Money serves as a unit of account when
Prices of goods and services are stated in terms of money
Which of the following is the best measure of the standard of living of the typical person in a country
Real GDP per person
The economy of country Ramblin was hit by a banking crisis which has led to a recession. Jason Wallace, a real estate agent, says that the economy will recover soon because the government is taking various measures to a counter the recession. According to him, the flow of credit will soon return to precrisis levels. His wife Anna Wallace disagrees with him. She says that the situation may not improve soon, given the substantial increase in unemployment. Which of the following, if true, would strengthen Anna's view?
Recent reports indicate that firms in most industries are putting investment plans on hold
Which one of the following is not one of the monetary policy goals of the fed
Reduce income inequality
Which of the following is not true regarding the multiple goals of the fed
The goal of financial markets stability means that the Fed tries to in sure that I set prices, such as stock prices, increase at a very high rate so investors can make more money
India has been able to experience rapid economic growth since 1991 despite for educational and health care systems because
The government scaled back central planning, reduced regulations, and introduced market based reforms
Capital can be differentiated between physical capital and human capital. Human capital is
The knowledge and skills workers acquire from education and training or from their life experiences
The central bank of the country controls the money supply, which equals the currency held by
The public plus their checking account balances
The two key factors that cause labor productivity to increase overtime are
The quantity of capital per hour worked and the level of technology
One of the goals of the Federal Reserve is priced stability. For the Fed to achieve this goal
The rate of inflation should be low, such as 1% to 3%, and should be fairly consistent
What is the best use of the rule of 70 among those listed below
To judge how rapidly real GDP per capita is growing over a long period of time
When Congress established the federal reserve in 1913, it's main responsibility was
To make discount loans to banks suffering from large withdrawals by depositors
When money is acting as a store of value, it allows an individual to
Transfer dollars, and therefore purchasing power, into the future
Maximum sustainable employment means the economy is producing at its potential where
Unemployment includes frictional and structural unemployment
