Macroeconomics 8 +10

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Dorky48
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151036
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Macroeconomics 8 +10
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2012-04-30 01:04:23
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Macro Macroeconomics
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Macro Final
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  1. Which of the following
    is a primary function of money?
    A) to serve as a unit of account
    B) to serve as an encouragement to work
    C) to reduce the burden of excessive imports
    D) to raise funds for the government
    A
  2. When you buy a
    hamburger for lunch, you are using money as a
    A) store of value.
    B) standard of deferred payment.
    C) medium of exchange.
    D) unit of accounting.
    C
  3. A $25,000 price
    tag on a new car is an example of money as
    A) medium of exchange.
    B) a unit of account.
    C) a store of value.
    D) a time deposit.
    B
  4. Checking deposits
    at banks are
    A) money.
    B) not money because they are an intangible.
    C) money only because they are insured by the FDIC.
    D) not money until they are converted into currency.
    A
  5. Which of the following is NOT included in the M1 definition of money?
    A) currency held outside banks
    B) time deposits
    C) traveler's checks
    D) checking deposits at savings and loans
    B
  6. The definition of M2 includes
    A) M1.
    B) savings deposits.
    C) time deposits.
    D) all of the above
    D
  7. An individual
    wanting the most liquid asset possible will hold
    A) currency.
    B) a savings account.
    C) checkable deposits at a bank.
    D) U.S government bonds.
    A
  8. 8) Money ________.
    A) is always composed of coins and paper
    B) loses its value as it becomes older
    C) requires a double coincidence of wants
    D) is any commodity that is generally acceptable as a means of payment
    D
  9. Which of the
    following institutions is NOT a depository institution?
    A) the U.S. Treasury
    B) a commercial bank
    C) a money market mutual fund
    D) a thrift institution, such as a savings and loan association
    A
  10. A bank's reserves
    include
    A) the cash in its vault plus the value of its depositors' accounts.
    B) the cash in its vault plus its deposits held at a Federal Reserve
    bank.
    C) the cash in its vault plus any gold held for the bank at Fort Knox.
    D) its common stock holdings, the cash in its vault, and any deposits at
    a Federal Reserve bank.
    B
  11. Liquidity is
    A) the property of an asset being instantly convertible into a means of
    payment with little loss in value.
    B) the degree of movement in an asset's interest rate.
    C) the same thing as a checking deposit.
    D) the net flow of gold into the U.S. Treasury.
    A
  12. Control of the
    nation's quantity of money is handled by
    A) Congress.
    B) the Federal Reserve System.
    C) the President of the United States.
    D) Congress, the Federal Reserve System, and all member commercial banks.
    B
  13. Monetary policy
    is conducted
    A) only by the Federal Reserve.
    B) by the Federal Reserve and the President of the United States.
    C) by the Federal Reserve, the President of the United States, and
    Congress.
    D) by the Federal Reserve with veto power residing with the President of
    the United States.
    A
  14. The Federal Open
    Market Committee
    A) consists of the Fed chairman and the 12 regional bank presidents.
    B) is the main policy-making organ of the Federal Reserve.
    C) is headed by the president of the New York Federal Reserve Bank.
    D) meets every week to review the state of the economy.
    B
  15. Which of the
    following is NOT a monetary policy tool?
    A) discount rate
    B) open market operations
    C) required reserve ratio
    D) federal funds rate
    D
  16. The discount rate
    is the interest rate that
    A) the Federal Reserve charges when it loans reserves to depository
    institutions.
    B) is the lowest rate that banks will charge when lending to their best
    customers.
    C) the Federal Reserve charges when it loans to the U.S. Government.
    D) banks charge when they lend to each other.
    A
  17. The monetary base
    does NOT include
    A) Federal Reserve notes.
    B) bank deposits at the Fed.
    C) checking accounts at commercial banks.
    D) cash in vaults at commercial banks.
    C
  18. The reserve ratio
    is a bank's reserves as a fraction of its
    A) total assets.
    B) total loans.
    C) currency.
    D) total deposits.
    D
  19. You deposit $4,000 in
    currency in your checking account. The bank holds 20 percent of all deposits as
    desired reserves. As a direct result of your deposit, your bank will create
    A) $200 of new money.
    B) $800 of new money.
    C) $1,600 of new money.
    D) $3,200 of new money.
    D
  20. The money
    multiplier is
    A) the amount by which a change in the quantity of money is multiplied to
    determine the change in the monetary base.
    B) the amount by which a change in the monetary base is multiplied to
    determine the change in the quantity of money.
    C) equal to bank reserves divided by the change in the monetary base.
    D) equal to bank reserves divided by the change the quantity of money.
    B
  21. Assets

    Reserves $400
    Loans $800
    Total $1,200

    Liabilities

    Deposits $1,200
    Total $1,200

    21) In the balance sheet above, the entries are
    in millions of dollars for the FBN Bank. If the desired reserve ratio on
    deposits is 10 percent, FBN Bank has desired reserves of
    A) $700 million.
    B) $120 million.
    C) $100 million.
    D) $0.
    B
  22. Assets
    Reserves $400
    Loans $800
    Total $1,200

    Liabilities
    Deposits $1,200
    Total $1,200

    In the balance
    sheet above, the entries are in millions of dollars for the FBN Bank. If the
    desired reserve ratio equals 10 percent, FBN Bank has excess reserves of
    A) $280 million.
    B) $200 million.
    C) $100 million.
    D) $0.
    A
  23. The nominal
    demand for money is
    A) inversely related to GDP.
    B) measured in constant dollars.
    C) inversely related to the price level.
    D) proportional to the price level.
    D
  24. Which of the
    following equations represents the equation of exchange?
    A) PM = VY
    B) MY = PV
    C) MV = PY
    D) M = VP/Y
    C
  25. If real GDP is$10 trillion, the price level is 120, and the quantity of money is $4 trillion,what is the velocity of circulation?
    A) 3
    B) 2.5
    C) 30
    D) 25
    A
  26. If velocity is 6
    and the quantity of money is $2 trillion, what is nominal GDP?
    A) $12 trillion
    B) $6 trillion
    C) $3 trillion
    D) $333 billion
    A
  27. An increase in
    the quantity of money leads to a proportional increase in the price level
    according to the
    A) equation of exchange.
    B) short-run velocity model.
    C) quantity theory of money.
    D) short-run theory of inflation.
    C
  28. Suppose the money
    growth rate is 3 percent, velocity is constant, and real GDP is growing at 2
    percent. What is the inflation rate?
    A) 1 percent
    B) 5 percent
    C) 3 percent
    D) 6 percent
    A
  29. MISSED QUESTIONS 24-27 ON CHAPTER 8
  30. The quantity of real GDP
    supplied ________ the amount of ________.
    A) increases as; labor input decreases
    B) decreases as; capital input increases
    C) decreases as; capital and labor input decreases
    D) is unaffected by; technology
    C
  31. In the macroeconomic
    long run,
    A) real GDP = potential GDP.
    B) the economy is at full employment.
    C) regardless of the price level, the economy is producing at potential GDP.
    D) All of the above are correct.
    D
  32. The long-run aggregate
    supply (LAS) curve
    A) has a positive slope. B) has a negative slope.
    C) is vertical. D) is horizontal.
    C
  33. In the short-run
    A) the aggregate supply curve is upward sloping.
    B) real GDP is always equal to potential GDP.
    C) the money wage rate can change.
    D) the price level does not change
    A
  34. A change in the
    full-employment quantity of labor ________ the short-run aggregate supply curve
    and ________ the long-run aggregate supply curve.
    A) shifts; shifts B) shifts; does not shift
    C) does not shift; shifts D) does not shift; does not shift
    A
  35. Technological progress
    will
    A) shift the LAS curve rightward but will not shift the SAS curve.
    B) not shift either the LAS or the SAS curve.
    C) shift both the LAS and SAS curves rightward.
    D) shift the SAS curve rightward but will not shift the LAS curve.
    C
  36. The aggregate demand
    curve
    A) has a negative slope. B) has a positive slope.
    C) is vertical. D) is horizontal.
    A
  37. Your real wealth is
    measured as the
    A) amount of assets you have in dollar terms.
    B) amount of money you have.
    C) amount of goods and services your wealth will buy.
    D) amount of goods you have divided by the price level.
    C
  38. According to the wealth
    effect, an increase in the price level ________ real wealth and ________
    consumption expenditure.
    A) increases; increases B) increases; decreases
    C) decreases; increases D) decreases; decreases
    D
  39. A decrease in
    government purchases of goods and service
    A) increases aggregate demand.
    B) increases the aggregate quantity demanded.
    C) decreases the aggregate quantity demanded.
    D) decreases aggregate demand.
    D
  40. An increase in the
    quantity of money
    A) increases aggregate demand.
    B) increases the aggregate quantity demanded.
    C) decreases the aggregate quantity demanded.
    D) decreases aggregate demand.
    A
  41. An inflationary gap
    means that short-run macroeconomic equilibrium GDP
    A) is less than full-employment GDP.
    B) equals full-employment GDP.
    C) is more than full-employment GDP.
    D) may be less than, more than, or the same as full-employment GDP depending on
    the level of potential GDP.
    C
  42. Which of the following
    can be said about economic growth? I. Economic growth is increases in long-run
    aggregate supply. II. Economic growth is the persistent increase in potential
    GDP.
    A) I only B) II only
    C) I and II D) neither I or II
    C
  43. A recessionary gap
    means that short-run macroeconomic equilibrium GDP
    A) is less than full-employment GDP.
    B) equals full-employment GDP.
    C) is more than full-employment GDP.
    D) may be less than, more than, or the same as full-employment GDP depending on
    the level of potential GDP.
    A
  44. Suppose the economy was
    initially in a long-run equilibrium. Then the world economy expands so that
    foreign incomes rise. U.S. aggregate demand ________ and eventually the money
    wage rate ________.
    A) increases;
    rises
    B) increases; falls
    C) decreases;
    rises
    D) decreases; falls
    A
  45. The forces that
    generate economic growth are those that
    A) shift the long-run aggregate supply curve leftward.
    B) shift the long-run aggregate supply curve rightward.
    C) shift the aggregate demand curve leftward.
    D) None of the above answers are correct.
    B
  46. If the economy
    experiences inflation, aggregate
    A) demand increases faster than aggregate supply.
    B) demand increases more slowly than aggregate supply.
    C) supply increases faster than aggregate demand.
    D) demand and supply increase at about the same rate.
    A
  47. Disposable income
    ________ when ________.
    A) increases; taxes decrease
    B) decreases; transfer payments increase
    C) increases; government purchases decrease
    D) decreases; aggregate income increases
    A
  48. At long-run
    macroeconomic equilibrium, ________.
    A) an inflationary gap exists
    B) real GDP equals potential GDP
    C) a recessionary gap exists
    D) real GDP is less than potential GDP but is as close as it is possible to be
    B
  49. When the price level
    increases, ________.
    A) real GDP remains constant
    B) the quantity of real GDP demanded decreases
    C) aggregate demand increases
    D) aggregate demand decreases
    B

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