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Unformatted text preview: You need to have JavaScript enabled in order to access this site. Skip To Content Dashboard • Account Dashboard Courses Calendar 0 Inbox • Help • • • • • Close Object 1 • • • • My Dashboard PRINCIPLES OF MACROECONOMICS 007 1172 Quizzes Macro_Ex3_Review Spring - 2017 - 1172 • • • • • • • • • • • • • • • • Home Announcements Assignments Discussions Grades People Files Syllabus Quizzes Modules Conferences Collaborations Chat Student Course Evaluations Instructor Course Evaluations Admin Course Evaluations • Library Help • My Media • Media Gallery Loading... Macro_Ex3_Review Started: Apr 30 at 12:37pm Quiz Instructions 2017-04-30T12:37:13-05:00 2017-04-30T12:37:15-05:00 2017-05-01T23:59:00-05:00 2017-0501T23:59:00-05:00 127304 Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 1 1 pts Edit this Question Delete this Question 0 multiple_choice_question "Barter" implies that "Barter" implies that to get one good or service, an individual offers another. to get one good or service, an individual offers money. to get a check, an individual offers a good or service. different kinds of money are exchanged for each other. none of the above Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 2 1 pts Edit this Question Delete this Question 0 multiple_choice_question To eliminate a recessionary gap the Fed typically uses __________ monetary policy, and to To eliminate a recessionary gap the Fed typically uses __________ monetary policy, and to eliminate an inflationary gap the Fed typically uses __________ monetary policy. expansionary; expansionary expansionary; contractionary contractionary; contractionary contractionary; expansionary Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 3 1 pts Edit this Question Delete this Question 0 multiple_choice_question Suppose aggregate demand is too low to the Suppose aggregate demand isbring too lowabout to bring about the Natural Real GDP level. A Keynesian Natural Real GDP prescription would call for a(n) _____________________ to close this recessionary gap. level. A Keynesian policy prescription increase in government spending would call for a(n) _____________________ to close this decrease in government spending recessionary gap. policy increase in taxes decrease in taxes a or d Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 4 1 pts Edit this Question Delete this Question 0 multiple_choice_question When the Fed is acting as When the Fed is acting as fiscal agent theTreasury, fiscal agentfor for the Treasury, it will it will buy securities from the Treasury, thereby providing the Treasury with money to pay the government's bills. receive and process bids for Treasury securities in preparation for the Treasury's auction of securities. serve as a lender of last resort. supply the Treasury with paper money whenever the Treasury does not have enough funds to meet its bills. supervise the Treasury by examining its books. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 5 1 pts Edit this Question Delete this Question 0 multiple_choice_question Suppose that the Fed undertakes an open market purchase of $5 of $5 million worth of securities from a Suppose that the Fed undertakes an open market purchase million worth of bank. If the required reserve ratio is 12%, what securities fromisathe resulting change in checkable deposits (or the required money supply), assuming thatbank.If there are the no cash leakages and that banks hold zero excess reserves? reserve ratio is 12%, $4.17 million what is the resulting change in checkable deposits (or the $7.95 million money supply), assuming that there are no cash leakages $5.68 million and that banks hold zero excess reserves? $41.67 million Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 6 1 pts Edit this Question Delete this Question 0 multiple_choice_question <p style="font-family: Times New Roman; Exhibit 15-3 font-size: 11pt; color: #000000;"><b>Exhibit 15-3</b><br><img src="/courses/33469/f iles/603869/preview" style="vertical-align : 0px;" width="292px" height="256px"></p> <br><div style="font-family: Times New Roman; font-size: 11pt; color: #000000;">Refer to Exhibit 15-3. The economy is currently at point 4. The Fed increases the money supply and the economy ends up at point 8. Has monetary policy been effective Refer to Exhibit 15-3. The economy is currently at point at moderating the 4. The Fed increases the money supply and the economy ends up at point 8. Has monetarybusiness policy beencycle?</div> effective at moderating the business cycle? Yes, since it eliminated the recessionary gap. Yes, since it decreased the unemployment rate. Yes, since it increased Real GDP. No, since it has moved the economy from a recessionary gap to an inflationary gap. a, b and c Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 7 1 pts Edit this Question Delete this Question 0 multiple_choice_question Fiscal policy refers to Fiscal policy refers to changes in the amount of government expenditures and taxes to achieve particular economic objectives. changes in the composition of a given amount of government expenditures to achieve particular economic objectives. changes in interest rates initiated by government action. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 8 1 pts Edit this Question Delete this Question 0 multiple_choice_question Money is defined by <i>Money</i> is defined by economists as as economists the market value of an asset. the funds one receives during a specified period of time. any good that is widely accepted in exchange and for the repayment of debts. both b and c Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 9 1 pts Edit this Question Delete this Question 0 multiple_choice_question Bank A has checkable deposits of $800,000 total reserves Bank A has checkable depositsand of $800,000 and total of reserves $200,000. If the 0.11, the bank has required reserves of reserve required ratio is 0.11, the $600,000. bank has required reserves of $88,000. $112,000. of $200,000. If the required reserve ratio is $22,000. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 10 1 pts Edit this Question Delete this Question 0 multiple_choice_question Which of the following Which of the following statements is <i>false</i>? statements is false? Asymmetric information can exist both before and after a transaction. Moral hazard occurs when one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party. Adverse selection has the potential to eliminate some markets. none of the above Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 11 1 pts Edit this Question Delete this Question 0 multiple_choice_question Assume that because of a long policy lag, Fedlag, starts Assume that because of a longthe policy the Fed starts implementing expansionary monetary policy too implementing late, i.e., at a time when the economy is already healing itself. As a result, the economy will probably expansionary monetary policy too late, move from an initial i.e., at a time when recessionary gap to an even the deeper recessionary economy is gap. already healing itself. As a result, recessionary gap to an inflationary gap. the economy will probably move from an initial inflationary gap to the natural level of Real GDP. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 12 1 pts Edit this Question Delete this Question 0 multiple_choice_question Assuming that the SRAS curve is upward sloping, ofwhich the of the following statements represents a correct Assuming that the SRAS curve is upwardwhich sloping, following statements and sequentially accurate economic explanation? represents a correct sequentially The demand for bonds falls, and the price of bonds falls, the interest rate rises, investment spending declines, the accurate economic explanation? AD curve shifts to the left, the price level declines and Real GDP decreases. The demand for bonds rises, the price of bonds rises, the interest rate rises, investment spending declines, the AD curve shifts to the left, the price level declines and Real GDP decreases. The supply of bonds rises, the price of bonds falls, the interest rate falls, investment spending rises, the AD curve shifts to the right, the price level declines and Real GDP decreases. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 13 1 pts Edit this Question Delete this Question 0 multiple_choice_question The economy is in the horizontal portion of the portion AS curve, The economy is in the horizontal of thethere AS curve, there is a liquidity trap, and investment is a liquidity trap, spending is sensitive to changes in the interest rate. According to the Keynesian transmission mechanism, and investment spending is sensitive if the money supply increases the interest rate __________, investment spending __________, the AD to changes in the curve __________ and the price level __________. interest rate. to the falls; rises; shifts to the right;According rises Keynesian transmission if the falls; rises; shifts to the right;mechanism, remains unchanged money supply increases the interest rate does not change; does not change; does not change; does not change __________, investment spending the ADrises does not change; shifts to the__________, left; does not change; curve __________ and the price level __________. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 14 1 pts Edit this Question Delete this Question 0 multiple_choice_question The economy is in a recessionary gap, wages inflexible The economy is in a recessionary gap,are wages are inflexible downward, and investment spending is downward, and insensitive to changes in the interest rate. In this situation, a Keynesian is likely to advocate the use investment spending is insensitive to of __________ policy. changes in the expansionary monetary interest rate. In this situation, a Keynesian is likely contractionary monetary to advocate the use of__________ policy. expansionary fiscal contractionary fiscal Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 15 1 pts Edit this Question Delete this Question 0 multiple_choice_question M1 is comprised of currency credit cards M1 is comprised of currency held outside banks + travelers held outside banks + traveler’s checks + __________. checks + __________. savings deposits gold Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 16 1 pts Edit this Question Delete this Question 0 multiple_choice_question Bank A has checkable deposits of $900,000 total reserves Bank A has checkable depositsand of $900,000 and total of reserves $112,000. If the 8 percent, the bank has excessrequired reserves ofreserve ratio is 8 percent, $40,000. the bank has excess reserves of of $112,000. If the required reserve ratio is $72,000. $13,440. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 17 1 pts Edit this Question Delete this Question 0 multiple_choice_question The larger the simple deposit multiplier, The larger the simple deposit multiplier, the higher the required reserve ratio. the higher the discount rate. the larger the change in the money supply for a given change in deposits. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 18 1 pts Edit this Question Delete this Question 0 multiple_choice_question Which of the following Which of the following statements is <i>false</i>? statements is false? Money is the only good that can (or does) serve as a store of value. In a barter economy, there is no good that serves as a unit of account. There are higher transaction costs of making exchanges in a barter economy than in a money economy. Money functions as a medium of exchange, unit of account, and store of value. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 19 1 pts Edit this Question Delete this Question 0 multiple_choice_question <p style="font-family: Times New Roman; Exhibit 15-3 font-size: 11pt; color: #000000;"><b>Exhibit 15-3</b><br><img src="/courses/33469/f iles/603869/preview" style="vertical-align : 0px;" width="292px" height="256px"></p> <br><div style="font-family: Times New Roman; font-size: 11pt; color: #000000;">Refer to Exhibit 15-3. The economy is currently at point 7. If the economy self-regulates, it will end up at point __________, whereas if contractionary Refer to Exhibit 15-3. The economy is currently at point monetary policy is7. If the economy self-regulates, it will end up at point __________, whereas if contractionary monetary policy effective, it willis effective, it will end up at point __________. end up at point 8; 6 __________.</div> 9; 6 9; 5 9; 3 3; 9 Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 20 1 pts Edit this Question Delete this Question 0 multiple_choice_question <p style="font-family: Times New Roman; Exhibit 12-1 font-size: 11pt; color: #000000;"><b>Exhibit Balance Sheet 12-1<br></b><br></p> BANK A <table border="0" cellspacing="0" ($ millions) cellpadding="0" style="border-collaps e: collapse; Assets Liabilities font-family: Times New Roman; font-size: 11pt; color: Required #000000;"> $20Checkable Deposits $ 100 Reserves <tr style="min-height: 24px;"><td Nontransaction style="width: 487px; Excess Reserves 0 50 Deps border-top: 2px solid #000000; border-bottom: 2px solid #000000; Loans 100Borrowings 5 vertical-align: center;" colspan="4"><p><b>Bal Securities 40 Bank Capital (A) ance Sheet<br>BANK A<br>($ millions)</b></p></td ></tr> Refer to Exhibit 12-1. How much<tr bank capital does Bank A have (i.e.what dollar value goes in blank (A))? style="min-height: $0. 24px;"> <td style="width: 145px; border-top: $50 1px solid #000000; border-bottom: 1px solid #000000; $20 vertical-align: center;"><p><b>Assets </b></p></td> $10 <td style="width: 102px; border-top: 1px solid #000000; border-bottom: 1px solid #000000; Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space vertical-align: to move this question. center;"></td> Flag this Question <td style="width: 240px; border-top: Question 21 1 pts solid #000000; Edit this Question Delete this 1px Question border-bottom: 1px 0 multiple_choice_question solid #000000; vertical-align: Under a constant center;" growth rate of money colspan="2"><p><b>Lia rule of 5 percent in in an economy in which Real GDP grows at an bilities</b></p></td> Under a constant growth rate of money rule of 5which percent an economy in </tr> average rate of 5 percent and velocity is constant, Real grows attheaninflation rate is <tr GDP average rate of 5 style="min-height: 5 percent. percent 24px;"> and velocity is the <tdconstant, style="width: inflation rate is 145px; border-top: -5 percent. 1px solid #000000; border-bottom: 1px solid #000000; 25 percent. vertical-align: center;"><p>Required Reserves</p></td> -25 percent. <td style="width: 102px; border-top: 1px solid #000000; constant at zero. border-bottom: 1px solid #000000; vertical-align: center;"><p>$20</p></ td> <td style="width: 138px; border-top: Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 22 1 pts Edit this Question Delete this Question 0 multiple_choice_question Persons who argue against the of and Persons who argue against thedeliberate deliberate useuse of fiscal fiscal and monetary cycle are referred to as policies to smooth out the business nonactivists. cycle are referred to as monetary policies to smooth out the business fine-tuners. activists. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 23 1 pts Edit this Question Delete this Question 0 multiple_choice_question Which of the following Which of the following statements is <i>false</i>? statements is false? The Fed serves as the lender of last resort for banks. The Fed serves as a fiscal agent for the U.S. Treasury. A major responsibility of the Fed is to control the nation's money supply. The federal government is the Fed's banker. Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 24 1 pts Edit this Question Delete this Question 0 multiple_choice_question <p style="font-family: 'times new roman'; Exhibit 13-1 font-size: 11pt; color: #000000; Ban Increase in Checkablefont-weight: New Required normal;"><b>Exhibit k Deposits Reserves 13-1<br></b></p> <table border="0" cellspacing="0" A $0 $0 cellpadding="0" style="font-family: 'times new roman'; B $1,000 font-size:(A) 11pt; color: #000000; font-weight: normal; C (C) $90 border-collapse: collapse;"> <tr> <td style="width: 96px; border: 1px New Checkable Deposits Created by Extending New Loans $1,000 (B) (D) D $810 (E) (F) Assume that the required reserve ratio is 10%, that there are no cash leakages, and that banks hold zero excess reserves. Refer to Exhibit 13-1. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. What dollar value goes in blanks (A) and (B), respectively?. $100; $90 $10; $90 $10; $990 $100; $900 Move To... This element is a more accessible alternative to drag & drop reordering. Press Enter or Space to move this question. Flag this Question Question 25 1 pts Edit this Question Delete this Question 0 multiple_choice_question According to the monetarist aggregate demand. directly increases According to the monetarist transmission transmission mechanism, a decrease mechanism, a decrease in the money supply __________ aggregate demand. in the money supply __________ indirectly increases directly decreases indirectly decreases equals the increase in Move To... 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