Question 1

The fact that you can use money to compare the value of one good to another is a result of which characteristic?

Accepted Answer

A) Its use as a medium of exchange. 
B) The fact that it is a store of value. 
C) The fact that it is a measure of value. 
D) The fact that it is backed by gold. 
A) Its use as a medium of exchange. 
B) The fact that it is a store of value. 
C) The fact that it is a measure of value. 
D) The fact that it is backed by gold. C

Question 2

If the Fed wants banks to have more money to lend, it can

Accepted Answer

A) raise its discount rate. 
B) sell government securities. 
C) raise the reserve ratio. 
D) lower the reserve ratio. 
A) raise its discount rate. 
B) sell government securities. 
C) raise the reserve ratio. 
D) lower the reserve ratio. D

Question 3

The Federal Reserve expanded their traditional tools set in the 2007-2009 recession to include

Accepted Answer

A) tax rate changes. 
B) government spending policies. 
C) labor regulations. 
D) the purchase of long term Treasuries. 
A) tax rate changes. 
B) government spending policies. 
C) labor regulations. 
D) the purchase of long term Treasuries. D

Question 4

The Constitution of the United States grants the power to "coin money and regulate the value thereof" (which is interpreted to mean the power to engage in monetary policy)to

Accepted Answer

A) Congress. 
B) the President. 
C) the Federal Reserve. 
D) the Treasury Department (through the U.S. Mint). 
A) Congress. 
B) the President. 
C) the Federal Reserve. 
D) the Treasury Department (through the U.S. Mint).

Question 5

A monetary aggregate is

Accepted Answer

A) coin. 
B) paper currency. 
C) coin and paper currency. 
D) a measure of the quantity of money in the economy. 
A) coin. 
B) paper currency. 
C) coin and paper currency. 
D) a measure of the quantity of money in the economy.

Question 6

M1 is the total amount of ________ in the economy.

Accepted Answer

A) coin 
B) paper currency and coin 
C) checking accounts, coin and paper currency 
D) paper currency only 
A) coin 
B) paper currency and coin 
C) checking accounts, coin and paper currency 
D) paper currency only

Question 7

When the Federal Reserve wishes to, in the short run, decrease inflation it

Accepted Answer

A) will increase the money supply by buying bonds. 
B) will increase the money supply by selling bonds. 
C) will decrease the money supply by selling bonds. 
D) has no policy options that will accomplish this. 
A) will increase the money supply by buying bonds. 
B) will increase the money supply by selling bonds. 
C) will decrease the money supply by selling bonds. 
D) has no policy options that will accomplish this.

Question 8

A common criticism of central banks in developing nations led by despotic dictatorships is that they lack

Accepted Answer

A) Independence of political influence 
B) Control by political parties 
C) Corruption 
D) An understanding of economics. 
A) Independence of political influence 
B) Control by political parties 
C) Corruption 
D) An understanding of economics.

Question 9

M2 is the total amount of _________ in the economy.

Accepted Answer

A) coin and paper currency 
B) coin, paper currency, and savings accounts 
C) coin, paper currency, savings accounts, and small CDs 
D) coin, paper currency, savings accounts, small CDs, and large CDs 
A) coin and paper currency 
B) coin, paper currency, and savings accounts 
C) coin, paper currency, savings accounts, and small CDs 
D) coin, paper currency, savings accounts, small CDs, and large CDs

Question 10

The property of money that allows us not to worry about "using it before it spoils" is called the

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) creation of value. 
D) security of value. 
A) medium of exchange. 
B) store of value. 
C) creation of value. 
D) security of value.

Question 11

If the reserve ratio is .02, the money multiplier can be as high as

Accepted Answer

A) 50. 
B) 20. 
C) 10. 
D) 5. 
A) 50. 
B) 20. 
C) 10. 
D) 5.

Question 12

If the monetary base is directly controlled by the Federal Reserve the supply of overnight money is

Accepted Answer

A) upward sloping. 
B) downward sloping. 
C) flat. 
D) vertical. 
A) upward sloping. 
B) downward sloping. 
C) flat. 
D) vertical.

Question 13

M2 includes

Accepted Answer

A) cash held by banks and by the public plus deposits at the Federal Reserve. 
B) currency plus checkable accounts and traveler's checks. 
C) currency plus checkable accounts plus traveler's checks plus small CDs and money market accounts. 
D) just cash held by the public. 
A) cash held by banks and by the public plus deposits at the Federal Reserve. 
B) currency plus checkable accounts and traveler's checks. 
C) currency plus checkable accounts plus traveler's checks plus small CDs and money market accounts. 
D) just cash held by the public.

Question 14

The Federal Reserve has

Accepted Answer

A) direct control over macroeconomic variables such as unemployment and inflation. 
B) indirect influence over macroeconomic variables such as unemployment and inflation through the use of intermediate targets. 
C) no control or influence over any significant macroeconomic variables. 
D) oversight on issues of the environment 
A) direct control over macroeconomic variables such as unemployment and inflation. 
B) indirect influence over macroeconomic variables such as unemployment and inflation through the use of intermediate targets. 
C) no control or influence over any significant macroeconomic variables. 
D) oversight on issues of the environment

Question 15

The fact that you can use money to buy things is a result of which characteristic?

Accepted Answer

A) Its use as a medium of exchange. 
B) The fact that it is a store of value. 
C) The fact that it is a measure of value. 
D) The fact that it is backed by gold. 
A) Its use as a medium of exchange. 
B) The fact that it is a store of value. 
C) The fact that it is a measure of value. 
D) The fact that it is backed by gold.

Question 16

If the Federal Reserve wished to decrease interest rates using open market operations it would

Accepted Answer

A) buy U.S. government securities. 
B) sell U.S. government securities. 
C) buy gold. 
D) buy corporate stocks. 
A) buy U.S. government securities. 
B) sell U.S. government securities. 
C) buy gold. 
D) buy corporate stocks.

Question 17

An decrease in the target for the federal funds rate would be an example of

Accepted Answer

A) expansionary fiscal policy. 
B) expansionary monetary policy. 
C) contractionary fiscal policy. 
D) contractionary monetary policy. 
A) expansionary fiscal policy. 
B) expansionary monetary policy. 
C) contractionary fiscal policy. 
D) contractionary monetary policy.

Question 18

If the Federal Reserve wished to engage in expansionary monetary policy it could

Accepted Answer

A) raise the primary credit rate. 
B) purchase government debt. 
C) raise the reserve ratio. 
D) sell government debt. 
A) raise the primary credit rate. 
B) purchase government debt. 
C) raise the reserve ratio. 
D) sell government debt.

Question 19

The money multiplier can be as ____ as the reciprocal of the reserve ratio but is usually ____.

Accepted Answer

A) high; lower 
B) high; constant 
C) low; higher 
D) low; constant 
A) high; lower 
B) high; constant 
C) low; higher 
D) low; constant

Question 20

The Federal Reserve expanded their traditional tools set in the 2007-2009 recession to include

Accepted Answer

A) tax rate changes. 
B) government spending policies. 
C) labor regulations. 
D) the purchase of mortgage backed securities. 
A) tax rate changes. 
B) government spending policies. 
C) labor regulations. 
D) the purchase of mortgage backed securities.

Exam 10: Monetary Policy

The fact that you can use money to compare the value of one good to another is a result of which characteristic?

If the Fed wants banks to have more money to lend, it can

The Federal Reserve expanded their traditional tools set in the 2007-2009 recession to include

The Constitution of the United States grants the power to "coin money and regulate the value thereof" (which is interpreted to mean the power to engage in monetary policy)to

A monetary aggregate is

M1 is the total amount of ________ in the economy.

When the Federal Reserve wishes to, in the short run, decrease inflation it

A common criticism of central banks in developing nations led by despotic dictatorships is that they lack

M2 is the total amount of _________ in the economy.

The property of money that allows us not to worry about "using it before it spoils" is called the

If the reserve ratio is .02, the money multiplier can be as high as

If the monetary base is directly controlled by the Federal Reserve the supply of overnight money is

M2 includes

The Federal Reserve has

The fact that you can use money to buy things is a result of which characteristic?

If the Federal Reserve wished to decrease interest rates using open market operations it would

An decrease in the target for the federal funds rate would be an example of

If the Federal Reserve wished to engage in expansionary monetary policy it could

The money multiplier can be as ____ as the reciprocal of the reserve ratio but is usually ____.

The Federal Reserve expanded their traditional tools set in the 2007-2009 recession to include

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

Filters

The money multiplier can be as as the reciprocal of the reserve ratio but is usually .