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1. Which of thesebest describes the U.S. Federal Reserve?
A. Is r
esponsible for monetary policy/money supply.
B. Printsmoney.
C. Keeps thecountry out of debt.
D. Helps people inneed.
E. None of theabove

2
. Whosets monetary policy in the United States?
A.
Congress
B. President
C. U.S.Treasury
D. FederalReserve
E. None of theabove

3. The prices ofmeat products in a competitive market are determined by:
A.
Government.
B. Businessmonopolies.
C. Supply anddemand.
D. The ConsumerPrice Index.
E. None of theabove

4
. Thepurchasing power of people's incomes is most affected by:
A.
The inflation rate.
B. The tradedeficit.
C. The balance ofpayments.
D. All of the aboveequally

5. Who makes fiscalpolicy in the United States?
A.
President and Congress
B. FederalReserve
C. U.S.Treasury
D. IRS
E. None of theabove

6. What is anexample of fiscal policy?
A.
Discount Rate Change
B. Prime RateChange
C. Federal IncomeTax Rate Change
D. All of theabove.
E. None of theabove



7. Which one of thefollowing is most likely to improve the wages
of American workers?
A.
An increase in business inventories.
B. An increase inproductivity.
C. An increase ininterest rates.
D. All of the aboveequally

8. What is thecurrent national rate (percent) of civilian unemployment?
A.
1% - 3%
B. 3% - 6%
C. 6% - 9%
D. More than9%
E. None of theabove

9
. Whichone of the following is the most widely used measure
of inflation?
A.
The Consumer Price Index.
B. The Index ofLeading Economic Indicators.
C. The primerate.
D. The FederalFunds rate.
E. None of theabove

10. What is the current annualrate of inflation?
A.
1% or less
B. 2% - 3%
C. 6% - 7%
D. 10% - 12%
E. None of theabove

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Yusra Anees
Yusra AneesLv10
28 Sep 2019

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Related questions

For each of the following, predict the effects on the equilibrium levels of aggregate output (Y) and the interest rate (r). Be sure you make predictions for both Y and r!

a. During 2000, the Federal Reserve was tightening monetary policy in an attempt to slow the economy. Congress passed a substantial cut in the individual income tax at the same time.

b. During the summer of 2003, the Congress passed and President Bush signed the third tax cut in 3 years. Many of the tax cuts took effect immediately. Assume the Fed holds the money supply fixed.

c. In 1993, Congress and the president raised taxes. At the same time, the Fed was pursuing an expansionary monetary policy.

d. In 2003, the Iraq War led to a sharp drop in consumer confidence and a drop in consumption. Assume the Fed holds the money supply constant.

e. The Fed attempts to increase the money supply to stimulate the economy, but plants are operating at 65 percent of their capacities, and businesses are pessimistic about the future.

1.  The Federal Funds Rate is set by the Federal Reserve on the first business day of each month by faxing the rate to the member banks of each Federal Reserve District.

A. True

B. False

 

2. The Federal Reserve is a single Central bank located on Wall Street in New York City.

A. True

B. False

 

3. Which of the following is NOT true about the Federal Reserve System?

A. Terms of service of the members of the Board of Governors are longer than the number of years that a two-term President of the United States would serve.

B. The Federal Reserve System is the nation's central bank and is comprised of 12 Federal Reserve Banks that serve as bankers' banks.

C. Some of the main functions of the Federal Reserve System include the authority to control the money supply, to issue currency, to set reserve requirements, and to hold reserves.

D. While Congress controls the actions of the Federal Reserve, the President has the authority to appoint and remove private banks from the Federal Reserve System.

 

4. Which of the following is NOT true about restrictive monetary policy?

A. A restrictive monetary policy seeks to raise the federal funds rate.

B. A restrictive monetary policy seeks to expand the money supply.

C. A restrictive monetary policy seeks to raise the Federal Funds Rate by selling government bonds or raising the reserve requirement ratio or increasing the discount rate.

D. A restrictive monetary policy is used when the government is concerned about suddenly increasing inflation.

 

5. Which of the following statements is NOT true about contractionary fiscal policy?

A. Contractionary fiscal policy consists of reductions in government spending or increases in taxes.

B. Contractionary fiscal policy can include both reductions in government spending or increases in taxes.

C. Contractionary fiscal policy seeks to shift the Aggregate Demand curve to the right.

D. Contractionary fiscal policy is used when the government seeks to reduce suddenly surging inflation.

 

6. The Federal Reserve creates money by printing the amount of desired new money and distributing it via armored trucks and high-security railways to Federal Reserve District Banks.

A. True

B. False

 

7. If the Fed feared a looming recession was just around the corner, which of the following actions would it "NOT" consider?

A. The Fed would raise the discount rate.

B. In order to influence prevailing commercial interest rates to fall, the Fed would buy large amounts of government securities.

C. In order to expand the money supply (which influences prevailing commercial interest rates to fall), the Fed would either buy large volumes of government bonds, lower the reserve requirement or cut the discount rate.

D. The Fed would seek to expand the money supply because, in so doing, the federal funds rate would fall and that would stimulate commercial interest rates to fall.

 

8. Which of the following statements is NOT true about the ability of the Federal Reserve System to expand the money supply?

A. The Federal Reserve System uses the fractional nature of the banking system to create money in order to expand the money supply.

B. The money multiplier defines the relationship between new excess reserves throughout the banking system and the creation of money by banks in the system. It is calculated by dividing the number 1 by the Required Reserve Ratio. [1/rr].

C. If the required reserve ratio is 20%, then $80 billion in new excess reserves will create $400 billion in bank system lending throughout the entire banking system.

D. If the reserve requirement is 100%, then the banks can generate 100% in new excess reserves.

 

9. Which of the following is NOT true about the tools of monetary policy?

A. The Fed can alter the money supply through open market operations, changes in the reserve ratio or adjustments to the discount rate.

B. Lowering the reserve ratio would expand the money supply.

C. Raising the discount rate would restrict the money supply.

D. Adjusting the reserve requirement is the most important day-to-day method for controlling the nation's money supply.

 

10. If the Federal Reserve wishes to hold off a feared recession, it will sell large volumes of government bonds.

A. True

B. False

10. The monetarist program undertaken during the 1979-1982 period resulted in:

A. a reduction in the inertial rate of inflation.

B. a dramatic rise in unemployment.

C. very high-interest rates.

D. all of the above.

E. none of the above.

 

11. Some economists have suggested replacing the emphasis on controlled money supply as found in monetarism with controlled growth in nominal GDP. Money supply targets, then:

A. would be determined so as to attain the desired nominal GDP level.

B. would be eliminated.

C. could be set arbitrarily.

D. would be settled on following the discovery of an acceptable level of unemployment.

E. all of the above are true.

 

12. Which of the following is NOT a keystone of monetarism?

A, The money supply is the determinant of nominal GDP growth.

B. Fiscal policy can raise interest rates and thereby raise velocity.

C. Prices and wages are relatively stable.

D.The private sector is relatively stable.

E. All of the above are keystones.

 

13. It follows from the assumptions of the rational-expectations macroeconomics that:

A. most unemployment is voluntary.

B. monetary policy can work in the short run but not in the long run.

C. fiscal policy is hamstrung because of delays in the legislative process in Congress.

D. all policy that is predictable will be undone by clever citizens.

E. all are true.

 

14. Which of the following is true according to monetarist theory?

A. The IS curve is quite steep while the LM Curve is relatively flat.

B. Changes in the money supply have their greatest effect on prices.

C. Fiscal policy can do little to improve economic conditions, but much to worsen them.

D. Real GDP stays at or near potential output most of the time.

E. All of the above are true.

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