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- 1. Multiple ChoiceIf Congress increases government spending by the same amount it increases taxes aggregate demand willremain the samedecrease, these are both contractionaryincreaseshift down
- 2. Multiple Choice
Which of the following results should be included where the question mark appears in the illustration?unemploymentinflationconsumer spendingproduction - 3. Multiple ChoiceWhich of the following results should be included where the question mark appears in the illustration?the reserve requirementinterest rateinflationunemployment
- 4. Multiple ChoiceMoney loses its value when itIt becomes too plentifulbecomes too portabaleis divisibleis durable
- 5. Multiple ChoiceWhat dollar amount should appear in place of the letter P in the table?$1,000,000$100,000$1,900,000$1,900
- 6. Multiple ChoiceWhat dollar amount should appear in place of the letter S in the table?$200,000$1,800,000$2,200,000$1,800
- 7. Multiple ChoiceWhat amount should replace the X in the table?$1,000$100,000$1,000,000$10,000
- 8. Multiple ChoiceWhat percentage should replace the Y in the table?20%5%10%
15%2% - 9. Multiple ChoiceWhich items on the graph are part of M1?currency and savings depositscurrency, traveler’s checks plus demand deposits, and other checkable depositsother checkable deposits, money market mutual funds, and small time depositscurrency, savings deposits, and small time deposits
- 10. Multiple ChoiceIn order for money to have value, it must have all of the following characteristics EXCEPTportability.durability.divisibility.plentiful availability.
- 11. Multiple ChoiceIf the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?Unemployment rates would risetaxes will riseThe government would put a freeze on pricesinternational trade would stop
- 12. Multiple ChoiceWhich of the following is a monetary policy action used to combat a recession?cutting taxesincreasing the money supplydecreasing the money supplyraising taxes
- 13. Multiple ChoiceThe Federal Reserve wants to reduce the nation's money supply. This could be accomplished by doing all of the following EXCEPTdecreasing the discount rate.increasing the reserve requirement.selling securities on the open market.making banks hold a reserve for all types of deposits.
- 14. Multiple ChoiceIf the Federal Reserve System wanted to stimulate the U.S. economy and reduce unemployment, it wouldA. cause interest rates to decrease because low interest rates encourage businessgrowth and expansionB. cause interest rates to rise because high interest rates encourage business growthand expansionC. increase the discount rate it charges banks, which would increase the money supplyD. increase consumer spending by reducing the money supply
- 15. Multiple ChoiceIf the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take?
(monetary / fiscal)increase the Required reserve / increase government spendingsell government securities / decrease taxesdecrease the interest rate / increase government spendingbuy government securities / decrease government spending - 16. Multiple ChoiceHow much must the bank keep on hand if the Required Reserve is 10% and there is a deposit of $100.1001109010
- 17. Multiple ChoiceHow much money must the bank keep on hand if the Required Reserve is 20% and there is a deposit of $1000.20502001020
- 18. Multiple ChoiceIf the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would bedecreasing taxes.decreasing government spending.reducing the investment tax credit.balancing the budget.
- 19. Multiple ChoiceThe rate the Fed charges banks for a loanDiscount rateFederal fund ratereserve ratioprime rate
- 20. Multiple ChoiceThe MPC is .75. Congress increase government spending by $100 billion and increases taxes by $100 billion. The GDPincreases by $800 billiondecreases by $800 billionremains the sameincreases by $100 billion
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