Econ Final

If the U.S. dollar ________, it becomes ________ valuable in world markets. a. appreciates; less b. depreciates; less c. depreciates; more d. is indexed; less e. is indexed; more

depreciates; less

Quantitative easing is the a.gradual release of money into the money supply through open market operations. b.targeted use of open market operations in which a central bank targets certain markets. c.strategy of increasing the money supply by buying U.S. Treasury securities on the open market. d.slow injection of money into the economy by the Federal Reserve. e.gradual decrease in the discount rate used to increase the money supply.

targeted use of open market operations in which a central bank targets certain markets.

Trade deficit is a. the sum of a nation's total exports and total imports. b. the difference between a nation's total exports and total imports. c. when a nation exports more than it imports. d. when a nation imports more than it exports. e. when a nation no longer feels it has the need for trade partners.

when a nation imports more than it exports.

________ would be hurt by unexpected inflation. a. Someone who borrowed money at a fixed interest rate b. A firm who hired a worker on a two-year wage contract c. A worker who signed a two-year wage contract d.A worker whose wage increases with inflation e. A firm that purchased inputs with a two-year contract

A worker who signed a two-year wage contract

Which of the following is not a part of the Federal Reserve System? a. District Federal Reserve Banks b. Board of Governors c. FDIC d. FOMC

FDIC

What happens if aggregate demand increases simultaneously with a decrease in short-run aggregate supply, due to anticipated expansionary monetary policy? a. The price level remains constant, and real gross domestic product (GDP) decreases. b. The price level increases, and real gross domestic product (GDP) increases. c. The price level increases, and real gross domestic product (GDP) decreases. d. The price level decreases, and real gross domestic product (GDP) remains constant. e. The price level increases, and real gross domestic product (GDP) remains constant.

The price level increases, and real gross domestic product (GDP) remains constant.

Expansionary monetary policy occurs when a.a central bank acts to decrease the money supply in an effort to stimulate the economy. b.Congress and the president increase taxes in an effort to stimulate the economy. c.Congress and the president decrease taxes in an effort to stimulate the economy. d.a central bank acts to increase the money supply in an effort to stimulate the economy. e.a central bank acts to increase government spending in an effort to stimulate the economy.

a central bank acts to increase the money supply in an effort to stimulate the economy.

To decrease the money supply, the Federal Reserve could a. increase the discount rate. b.decrease the required reserve ratio. c.forbid the reselling of U.S. Treasury securities. d.encourage banks to lend money to borrowers. e. conduct an open market purchase of U.S. Treasury securities.

increase the discount rate.

The discount rate, by definition, is the a.rate at which loans are issued between banks and the Federal Reserve. b.interest rate charged by banks on interbank loans. c.difference between the interest paid for deposits and the interest gained from loans. d.percentage of deposits that must be held back and not loaned out. e.interest rate on the loans made by the Federal Reserve to private banks.

interest rate on the loans made by the Federal Reserve to private banks.

If a currency becomes ________ valuable in world markets, then its price falls, and this decrease is called a(n) ________. a. more; approximation b. less; depreciation c. less; appreciation d. more; depreciation e. more; appreciation

less; depreciation

When supply shifts cause a downturn in the economy, a. monetary policy is more likely to restore the economy to its prerecession conditions. b. inflation is not a concern. c. the natural rate of unemployment decreases. d. monetary policy is absolutely ineffective, in the short-run. e. monetary policy is much less likely to restore the economy to its prerecession conditions.

monetary policy is much less likely to restore the economy to its prerecession conditions.

The Federal Reserve generally uses ________ to implement monetary policy. a.reserve requirements b.open market operations c.fiscal policy d.discount policies e.government spending and taxes

open market operations

Open market operations involve the a.purchase or sale of bonds by a central bank. b.Federal Reserve dictating the discount rate to influence the money supply. c.purchase of securities from the U.S. Treasury. d.loaning of deposits between private banks. e.sale of Federal Reserve notes.

purchase or sale of bonds by a central bank.

Expansionary monetary policy makes the aggregate demand curve a. shift to the left. b. become flatter. c. become steeper. d.shift to the right. e. remain static.

shift to the right.