Macro test 3 example #48167

Federal Express's purchase of trucks and planes

The distinction between physical and financial capital is that

Economists use the term wealth to mean

A household increases its wealth by

To acquire financial capital, a firm can

A document that promises to pay specified sums of money on specified dates and is a debt to the 6) issuer is called

A distinction between stocks and bonds is that

the following are financial institution?

In the loanable funds market, demanders of funds are ________ and suppliers of funds are 9) ________.

Other things remaining the same, as the real interest rate increases,

As the economy enters a strong expansion, then firms' demand for loanable funds

The demand for loanable funds

Suppose firms become more optimistic about the economy's ability to avoid a recession and hence 15) the expected profit increases. As a result, the demand for loanable funds curve shifts ________ and the real interest rate ________.

For a government to add to the supply of loanable funds, it must

If a government has a budget deficit, it must

Other things being equal, a government budget deficit increases

The crowding-out effect implies that a government budget deficit ________ the demand for loanable funds and ________ equilibrium investment.

During financial crisis of 2008-09, the government rescued financial firms and the auto industry.As a result,

For a commodity or token to be money it must

Money is any commodity or token that is

The functions of money are

What is a problem with barter that makes it so difficult to use?

When we put a price tag on goods and services, we are using money as a

Fiat money means

Which of the following is an example of money?

M1 is composed of

M2 consists of

Money market mutual funds

When a commercial bank receives a deposit, it must keep part of the deposit as cash reserves to 32) satisfy its

As the central bank, the Federal Reserve System provides banking services to

All of the following are elements in the structure of the Fed EXCEPT the

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money?

Required reserve ratios are the minimum amount of

The discount rate is

Open market operations are when the Fed buys or sells

In response to the financial crisis in 2008, the Fed created which of the following policy tools?

When the Fed buys securities from the public, banks' reserves ________ and the quantity of money ________.

When the Fed purchases government securities ________ loans end up being made because ________.

The difference between the nominal interest rate and the real interest rate is the

When the Fed increases the quantity of money, the

If the Fed is worried about inflation and wants to raise the interest rate, in the short run it can

Velocity is V, the quantity of money is M, the price level is P, and real GDP is Y. Which of the 46) following formulas is correct?

When real GDP equals potential GDP, the quantity theory of money says that an increase in the quantity of money brings an equal percentage

In the early 1920s, Germany experienced hyperinflation because Germany's

During a period of hyperinflation, as households and firms avoid holding money,

Which of the following does NOT affect potential GDP?

If the costs of production increase, there is

An increase in potential GDP ________ aggregate supply and ________.

An increase in ________ increases potential GDP and ________ aggregate supply.

The AD curve is a graph depicting the

Which of the following decreases aggregate demand and shifts the AD curve leftward?

A tax cut ________ aggregate demand and ________.

If a country is trying to recover from a recent recession, it is unlikely their government officials will decide to ________ because it would ________.

If the Fed increases the quantity of money, then

Macroeconomic equilibrium occurs when

If the economy is at macroeconomic equilibrium, then real GDP

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more 61) than potential GDP, there is

A recessionary gap occurs when ________ so that real GDP is ________ potential GDP.

Inflation can be started by

Demand-pull inflation starts with

Cost-push inflation can start with

When cost-push inflation starts, real GDP ________ and the price level ________.

A combination of recession and inflation is called

When OPEC nearly tripled the price of oil in late 1973,

An increase in investment ________ aggregate demand, the aggregate demand curve shifts ________ and the economy is in the ________ phase of the business cycle.

During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This 71) increase in government expenditure on goods and services most likely created

A recession in the rest of the world means U.S.

The the government increases the level of government expenditure. If there is no change in the 73) aggregate supply curve, then aggregate demand will ________, real GDP will ________, and the price level will ________.

n the United States for the year 2016, the federal government had a ________ so the national debt 74) was ________.

If the federal government has a budget surplus, then it is definitely the case that

The national debt is

What two parts of the government determine the federal budget?

Automatic stabilizers are defined as

An example of automatic fiscal policy is

If the economy is in equilibrium with real GDP less than potential GDP, there is ________ gap, and a fiscal policy that ________ is appropriate.

In order to help the economy recover from a recession using fiscal policy, the government can ________ so that aggregate demand increases.

An economy is at a short-run equilibrium as illustrated in the above figure. An appropriate fiscal policy option to move the economy to full employment is to

The law-making time lag is best described as the time that it takes

The ________ view says that fiscal stimulus has a multiplier effect that makes it a ________ tool to 84) fight a deep recession.

The crowding out effect refers to the ________ from ________ in the government's budget deficit

If fiscal stimulus creates a large budget ________, then in the long run economic growth ___

Control of monetary policy rests with

The "dual mandate" ofthe Federal Reserve includes

The Federal Reserve monetary policy goal of maximum employment means

When real GDP is less than potential GDP, there is ________ which causes the unemployment rate 90) to ________.

Which of the following statements are correct?

The federal funds rate is

Which of the following are policy instruments available to the Fed as it tries to achieve its macroeconomic goals?

To change the federal funds rate, the Fed

Steps in the transmission of monetary policy are

If the Fed sells U.S. government securities,

A decrease in the federal funds rate

If the Fed is concerned about a possible recession, it ________ the federal funds rate, which 98) ________ the quantity of reserves and ________ the amount of bank loans.

A change in monetary policy affects

Suppose monetary policy results in the exchange rate falling (i.e. a weaker dollar). As a result,

When the exchange rate falls, imports ________ and exports _______

If the Fed raises the federal funds rate,

he Federal Reserve fears that the United States economy is growing too slowly and is stuck in a 103) recession. To move the economy back to its potential GDP, the most likely policy action for the Fed is to ________ the federal funds and thus _____

If the Fed lowers the federal funds rate, eventually the

If the Fed fears inflation, it ________ by ________ government securities.

When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate 106) ________ and the quantity of money ________.

When the Fed raises the federal funds rate, the consumption expenditure ________ and investment 107) ________.

During the Great Depression, real GDP decreased, unemployment soared, and the inflation rate 108) was negative. Which would have been the appropriate federal government policy combination to improve economic performance?

During the late 1960s, real GDP increased, unemployment fell, and the inflation rate started to rise. 109) Which would have been the appropriate federal government policy combination to improve economic performance by lowering the inflation rate?