EX2 - 1 Exam 2 Spring 2008 Chapters 9-12[1]Bank reserves...

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1 Exam 2, Spring 2008, Chapters 9-12 Form A [1]Bank reserves are defined as _____. 1. the total cash in bank vaults. 2. money deposited in Federal Reserve accounts. 3. the sum of vault cash and deposits at Federal Reserve banks 4. the total amount of money a bank must hold. 5. ten percent of demand deposit liabilities. [2]According to the National Bureau of Economic Research (the NBER), the U.S. economy entered a recession in March 2001. The recession lasted until _____, and was caused by a decrease in autonomous _____. 1. November 2001, investment. 2. November 2001, consumption. 3. March 2002, investment. 4. 5. March 2002, consumption. None of the above. [3]Which of 1-3 represents the Fed’s contribution to the 1937 recession? 1. An increase in the Fed’s discount rate. 2. An increase in the required reserve ratio. 3. An open market sale of bonds by the Fed. 4. 5. Each of the above. None of the above. [4]During the Great Depression there was a dramatic drop in the money multiplier. Which of the following occurred, and was a contributing factor to this drop? 1. Individuals wished to hold more of their money in the form of cash and less in the form of bank deposits. 2. Banks increased the ratio of reserves to deposits. 3. Each of 1 and 2 occurred and each was a contributing factor. 4. Neither of 1 and 2 occurred. [5]Which of 1-3 is not included in the M1 money stock? 1. travelers' checks 2. demand deposits 3. checking account deposits 4. Neither of 1-3 is included in M1. 5. Each of 1-3 is included in M1
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2 Questions 6-11 deal with the short-run, income determination model of Chapter 10, in which we ignored interest rate changes. (This is the one equation Y= d Y model.) Use the following graph to answer 6-8. d Y ( aggregate expenditures) d Y $600 Y* Y The above graph comes from the country of Freedonia. In Freedonia the aggregate expenditure line crosses the vertical axis at $600. The MPC is 3/4. Use this information and the graph to answer questions 6-8. [6]What is equilibrium output in Freedonia? 1. $800. 2. $1800.
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This note was uploaded on 03/31/2008 for the course ECON 2006 taught by Professor Rdcothren during the Spring '08 term at Virginia Tech.

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EX2 - 1 Exam 2 Spring 2008 Chapters 9-12[1]Bank reserves...

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