MACRO final
If required reserve ratio is 20 percent the simple deposit multiplier is
5
Which information about fiat money is false
Fiat money is backed by gold
Following a decrease in government spending, as the price level falls we would expect the level of interest rates to _____ and investment to _____.
decrease, increase
The rate of interest banks charge other banks for overnight loans of reserves is the
federal funds rate
If a person takes $100 from his/her piggy bank at home and puts it in his/her savings account, then M1 will ________ and M2 will ________.
decrease, not change
If the Fed buys U.S. Treasury securities, then this
increases reserves, encourages banks to make more loans, and increases the money supply
To increase the money supply the Federal Reserve could
lower the discount rate
Why is the short run aggregate supply curve upward sloping?
menu costs make some prices sticky
If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries
the long run AS curve will shift to the left
Monetary policy refers to the actions the Federal Reserve takes to manage
the money supply and interest rates to pursue its economic objectives
What is an example of discretionary fiscal policy
the tax cuts passed by Congress in 2001 to combat the recession
Suppose Warren Buffet withdraws $1 million from his checking account at Chase Manhattan Bank. If the required reserve ratio is 20 percent, what is the maximum change in deposits in the banking system?
-5 million
Using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be
11%
What is considered to be contractionary fiscal policy
Congress increases the income tax rate
Which of the following is a reason why we should consider the federal national debt a problem
If the debt drives up interest rates crowding out will occur
The statement "My iPhone is worth $700" represents money's function as
a unit of account
A central bank can help stop a bank panic by
acting as a lender of last resort
automatic stabilizers
changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action
Which of the following is not counted in M1
credit card balances
The M1 measure of the money supply equals
currency in circulation plus checking account deposits in banks
Which of the following is counted as a liability for a bank
customer deposits
Suppose the economy is at point b. A policy to restore full employment would be
decrease in government purchase
Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in AD causes price expectations to
rise shifting the SRAS curve to the left
Which of the following Fed actions would both decrease the money supply
sell bonds and raise the reserve requirement
If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
stagflation