Question 1

The money demand curve will shift to the left if:

Accepted Answer

A) the nominal interest rate increases. 
B) the nominal interest rate decreases. 
C) ATM machines are introduced. 
D) the price level increases. 
A) the nominal interest rate increases. 
B) the nominal interest rate decreases. 
C) ATM machines are introduced. 
D) the price level increases.

Question 2

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r
Ip = 200 - 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, what would be the impact on short-run equilibrium output of a one-percentage-point increase in the real interest rate, assuming the income-expenditure multiplier equals 5?

Accepted Answer

A) Short-run equilibrium output would increase by 35 units. 
B) Short-run equilibrium output would decrease by 700 units. 
C) Short-run equilibrium output would decrease by 35 units. 
D) Short-run equilibrium output would decrease by 7 units. 
A) Short-run equilibrium output would increase by 35 units. 
B) Short-run equilibrium output would decrease by 700 units. 
C) Short-run equilibrium output would decrease by 35 units. 
D) Short-run equilibrium output would decrease by 7 units.

Question 3

Any value of the money supply chosen by the Federal Reserve implies a specific value for ______.

Accepted Answer

A) potential output 
B) the nominal interest rate 
C) government purchases 
D) the budget deficit 
A) potential output 
B) the nominal interest rate 
C) government purchases 
D) the budget deficit

Question 4

The opportunity cost of money is:

Accepted Answer

A) the time spent going to the bank to withdraw funds. 
B) the fees charged by banks to provide checking services. 
C) the nominal interest rate. 
D) the price level. 
A) the time spent going to the bank to withdraw funds. 
B) the fees charged by banks to provide checking services. 
C) the nominal interest rate. 
D) the price level.

Question 5

Federal Reserve actions that increase nominal interest rates and decrease the money supply:

Accepted Answer

A) close a recessionary gap. 
B) close an expansionary gap. 
C) raise the rate of inflation. 
D) raise bond prices. 
A) close a recessionary gap. 
B) close an expansionary gap. 
C) raise the rate of inflation. 
D) raise bond prices.

Question 6

Deposit insurance is a system in which the government guarantees that:

Accepted Answer

A) depositors will not lose any money even if their bank goes bankrupt. 
B) people can have deposits at commercial banks. 
C) commercial banks will not go bankrupt. 
D) commercial banks will not lose any deposits. 
A) depositors will not lose any money even if their bank goes bankrupt. 
B) people can have deposits at commercial banks. 
C) commercial banks will not go bankrupt. 
D) commercial banks will not lose any deposits.

Question 7

The Federal Reserve can decrease the money supply by:

Accepted Answer

A) increasing reserve requirements. 
B) decreasing the discount rate. 
C) introducing deposit insurance. 
D) conducting open market purchases. 
A) increasing reserve requirements. 
B) decreasing the discount rate. 
C) introducing deposit insurance. 
D) conducting open market purchases.

Question 8

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r
Ip = 200 - 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, what would be the impact on autonomous expenditures of a one-percentage-point increase in the real interest rate?

Accepted Answer

A) Autonomous expenditures would increase by 35 units. 
B) Autonomous expenditures would decrease by 70 units. 
C) Autonomous expenditures would decrease by 35 units. 
D) Autonomous expenditures would decrease by 7 units. 
A) Autonomous expenditures would increase by 35 units. 
B) Autonomous expenditures would decrease by 70 units. 
C) Autonomous expenditures would decrease by 35 units. 
D) Autonomous expenditures would decrease by 7 units.

Question 9

During the Christmas shopping season, the demand for money increases significantly.If the Fed takes no actions to offset the increase in money demand, then nominal interest rates will:

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) equal the real interest rates. 
A) increase. 
B) decrease. 
C) remain constant. 
D) equal the real interest rates.

Question 10

The Federal Reserve discount rate is the rate of interest charged on loans from ______ to _____.

Accepted Answer

A) the Federal Reserve; commercial banks 
B) the Federal Reserve; the U.S.Treasury 
C) commercial banks; the Federal Reserve 
D) the U.S.Treasury; commercial banks 
A) the Federal Reserve; commercial banks 
B) the Federal Reserve; the U.S.Treasury 
C) commercial banks; the Federal Reserve 
D) the U.S.Treasury; commercial banks

Question 11

The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the:

Accepted Answer

A) National Monetary Commission. 
B) Board of Governors. 
C) Federal Open Market Committee. 
D) Federal Reserve System. 
A) National Monetary Commission. 
B) Board of Governors. 
C) Federal Open Market Committee. 
D) Federal Reserve System.

Question 12

The Board of Governors consists of ______ governors appointed for staggered ______ terms.

Accepted Answer

A) 5; 12-year 
B) 5; 14-year 
C) 7; 12-year 
D) 7; 14-year 
A) 5; 12-year 
B) 5; 14-year 
C) 7; 12-year 
D) 7; 14-year

Question 13

Refer to the figure below.If the Federal Reserve wants to set the nominal interest rate at 1%, it must conduct open market ______ to set the money supply at _____.

Accepted Answer

A) purchases; 300 
B) sales; 100 
C) purchases; 900 
D) sales; 900 
A) purchases; 300 
B) sales; 100 
C) purchases; 900 
D) sales; 900

Question 14

Innovations in the United States, such as credit cards, debit cards, and ATMs have:

Accepted Answer

A) increased the demand for money. 
B) decreased the demand for money. 
C) had no impact on the supply or demand for money. 
D) increased the supply of money. 
A) increased the demand for money. 
B) decreased the demand for money. 
C) had no impact on the supply or demand for money. 
D) increased the supply of money.

Question 15

In the short-run, if the Federal Reserve increases interest rates, then consumption and investment ______, planned aggregate expenditure ______, and short-run equilibrium output _______.

Accepted Answer

A) increase; increases; increases 
B) increase; increases decreases 
C) increase; decreases; decreases 
D) decrease; decreases; decreases 
A) increase; increases; increases 
B) increase; increases decreases 
C) increase; decreases; decreases 
D) decrease; decreases; decreases

Question 16

The money demand curve will shift to the left if:

Accepted Answer

A) the nominal interest rate increases. 
B) the nominal interest rate decreases. 
C) the price level increases. 
D) the price level decreases. 
A) the nominal interest rate increases. 
B) the nominal interest rate decreases. 
C) the price level increases. 
D) the price level decreases.

The money demand curve will shift to the left if:

Any value of the money supply chosen by the Federal Reserve implies a specific value for ______.

The opportunity cost of money is:

Federal Reserve actions that increase nominal interest rates and decrease the money supply:

Deposit insurance is a system in which the government guarantees that:

The Federal Reserve can decrease the money supply by:

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r Ip = 200 - 400r G = 200 NX = 10 T = 150 Given the information about the economy above, what would be the impact on autonomous expenditures of a one-percentage-point increase in the real interest rate?

During the Christmas shopping season, the demand for money increases significantly.If the Fed takes no actions to offset the increase in money demand, then nominal interest rates will:

The Federal Reserve discount rate is the rate of interest charged on loans from __ to _.

The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the:

The Board of Governors consists of governors appointed for staggered terms.

Refer to the figure below.If the Federal Reserve wants to set the nominal interest rate at 1%, it must conduct open market __ to set the money supply at _.

Innovations in the United States, such as credit cards, debit cards, and ATMs have:

In the short-run, if the Federal Reserve increases interest rates, then consumption and investment , planned aggregate expenditure , and short-run equilibrium output ___.

The money demand curve will shift to the left if:

Thinking Like an Economist

Comparative Advantage

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

Exam 12: Monetary Policy and the Federal Reserve

The money demand curve will shift to the left if:

Any value of the money supply chosen by the Federal Reserve implies a specific value for ______.

The opportunity cost of money is:

Federal Reserve actions that increase nominal interest rates and decrease the money supply:

Deposit insurance is a system in which the government guarantees that:

The Federal Reserve can decrease the money supply by:

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r Ip = 200 - 400r G = 200 NX = 10 T = 150 Given the information about the economy above, what would be the impact on autonomous expenditures of a one-percentage-point increase in the real interest rate?

During the Christmas shopping season, the demand for money increases significantly.If the Fed takes no actions to offset the increase in money demand, then nominal interest rates will:

The Federal Reserve discount rate is the rate of interest charged on loans from ______ to _____.

The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the:

The Board of Governors consists of ______ governors appointed for staggered ______ terms.

Refer to the figure below.If the Federal Reserve wants to set the nominal interest rate at 1%, it must conduct open market ______ to set the money supply at _____.

Innovations in the United States, such as credit cards, debit cards, and ATMs have:

In the short-run, if the Federal Reserve increases interest rates, then consumption and investment ______, planned aggregate expenditure ______, and short-run equilibrium output _______.

The money demand curve will shift to the left if:

Thinking Like an Economist

Comparative Advantage

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

The Federal Reserve discount rate is the rate of interest charged on loans from __ to _.

The Board of Governors consists of governors appointed for staggered terms.

Refer to the figure below.If the Federal Reserve wants to set the nominal interest rate at 1%, it must conduct open market __ to set the money supply at _.

In the short-run, if the Federal Reserve increases interest rates, then consumption and investment , planned aggregate expenditure , and short-run equilibrium output ___.