Question 1

How did the U.S.government make a profit out of its TARP investments during the financial crisis of 2007-2009?

Accepted Answer

The government made a small pr

Question 2

Which of the following is an example of pork barrel spending?

Accepted Answer

A)  Government funds spent by a senator to build fountains in his home state 
B)  Funds spent by the federal government to repair national highways 
C)  Funds spent by the government to provide unemployment insurance 
D)  Funds spent by the Fed to bail out large financial institutions during recessions 
A)  Government funds spent by a senator to build fountains in his home state 
B)  Funds spent by the federal government to repair national highways 
C)  Funds spent by the government to provide unemployment insurance 
D)  Funds spent by the Fed to bail out large financial institutions during recessions

Question 3

If the quantity of bank reserves held at the Fed increases,________.

Accepted Answer

A)  the rate of inflation increases 
B)  bank deposits decrease 
C)  the real interest rate increases 
D)  the number of loans issued by banks decreases 
A)  the rate of inflation increases 
B)  bank deposits decrease 
C)  the real interest rate increases 
D)  the number of loans issued by banks decreases

Question 4

The unemployed workers of Perrylia could receive up to 30 weeks of unemployment insurance.However,during a recent recession,the government extended the eligibility period to 45 weeks.How is this change in policy likely to affect the labor market in Perrylia?

Accepted Answer

Such a policy is likely to have complex

Question 5

To ________ the long-term expected real interest rate in the United States,the Fed needs to ________.

Accepted Answer

A)  lower; raise the long-term nominal interest rate 
B)  lower; raise the long-term expected inflation rate 
C)  raise; lower the long-term nominal interest rate 
D)  raise; raise the long-term expected inflation rate 
A)  lower; raise the long-term nominal interest rate 
B)  lower; raise the long-term expected inflation rate 
C)  raise; lower the long-term nominal interest rate 
D)  raise; raise the long-term expected inflation rate

Question 6

Suppose the inflation rate target is zero and the long-run federal funds target is also zero.Calculate the federal funds rate if the current inflation rate is 5 percent and real output is 4.5 percent below the trend output level.

Accepted Answer

A)  2.25 percent 
B)  0.5 percent 
C)  5.25 percent 
D)  0.25 percent 
A)  2.25 percent 
B)  0.5 percent 
C)  5.25 percent 
D)  0.25 percent

Question 7

Which of the following is likely to happen if the reserves held at the Fed by the private banks decrease?

Accepted Answer

A)  Banks will make more loans. 
B)  Labor demand will increase. 
C)  The M2 measure of money will decrease. 
D)  The nominal interest rate will decrease. 
A)  Banks will make more loans. 
B)  Labor demand will increase. 
C)  The M2 measure of money will decrease. 
D)  The nominal interest rate will decrease.

Question 8

Rapid growth in M2 is likely to lead to ________.

Accepted Answer

A)  high levels of inflation 
B)  high real interest rates 
C)  low levels of investment 
D)  a low demand for labor 
A)  high levels of inflation 
B)  high real interest rates 
C)  low levels of investment 
D)  a low demand for labor

Question 9

The economy is in a recession.The Fed could take direct action to stimulate economic activity by ________.

Accepted Answer

A)  lowering short-term interest rates 
B)  lowering long-term interest rates 
C)  increasing short-term interest rates 
D)  increasing long-term interest rates 
A)  lowering short-term interest rates 
B)  lowering long-term interest rates 
C)  increasing short-term interest rates 
D)  increasing long-term interest rates

Question 10

If the government provides a subsidy of $1 per hour to employers for hiring workers,________.

Accepted Answer

A)  the equilibrium employment will decrease 
B)  the equilibrium real wage will increase 
C)  labor supply will increase 
D)  labor demand will decrease 
A)  the equilibrium employment will decrease 
B)  the equilibrium real wage will increase 
C)  labor supply will increase 
D)  labor demand will decrease

Question 11

On a graph,if the x-axis measures the quantity of bank reserves and the y-axis measures the federal funds interest rate,the demand curve for bank reserves ________.

Accepted Answer

A)  slopes upward 
B)  slopes downward 
C)  is perfectly elastic 
D)  is perfectly inelastic 
A)  slopes upward 
B)  slopes downward 
C)  is perfectly elastic 
D)  is perfectly inelastic

Question 12

Subsidizing wages during a recession is a type of fiscal policy aimed at increasing employment.

Accepted Answer

A) True 
 B)False

Question 13

If long-term interest rates fall,________.

Accepted Answer

A)  unemployment increases 
B)  the demand for loans decreases 
C)  investment by firms decreases 
D)  investment by firms increases 
A)  unemployment increases 
B)  the demand for loans decreases 
C)  investment by firms decreases 
D)  investment by firms increases

Question 14

During a recession,a countercyclical fiscal or monetary policy can be used to ________ the economy by shifting ________.

Accepted Answer

A)  slow down; the labor demand curve to the left 
B)  stimulate; the labor demand curve to the left 
C)  stimulate; the labor demand curve to the right 
D)  slow down; the labor demand curve to the right 
A)  slow down; the labor demand curve to the left 
B)  stimulate; the labor demand curve to the left 
C)  stimulate; the labor demand curve to the right 
D)  slow down; the labor demand curve to the right

Question 15

Which of the following should be increased by the government to control the growth rate of real GDP during an expansion?

Accepted Answer

A)  Transfer payments 
B)  Expenditure on infrastructural development 
C)  Tax rates 
D)  Import duties 
A)  Transfer payments 
B)  Expenditure on infrastructural development 
C)  Tax rates 
D)  Import duties

Question 16

A specific policy rule announcement by the Fed decreases credibility in the Fed's ability to maintain low inflation.

Accepted Answer

A) True 
 B)False

Question 17

Open market operations refer to the Fed's transactions with ________.

Accepted Answer

A)  households 
B)  firms 
C)  state governments 
D)  private banks 
A)  households 
B)  firms 
C)  state governments 
D)  private banks

Question 18

A recent study has revealed that the unemployment rate in Corinthia has been increasing over the past few years.What will be the impact of an increase in government spending in Corinthia?

Accepted Answer

The government's extra expenditure might

Question 19

When does the Fed lend through the discount window?

Accepted Answer

The Fed lends through the discount windo

Question 20

Which of the following is likely to happen because of quantitative easing by the Fed?

Accepted Answer

A)  A rightward shift of the demand curve for bank reserves 
B)  A leftward shift of the demand curve for bank reserves 
C)  A rightward shift of the supply curve of bank reserves 
D)  A leftward shift of the supply curve of bank reserves 
A)  A rightward shift of the demand curve for bank reserves 
B)  A leftward shift of the demand curve for bank reserves 
C)  A rightward shift of the supply curve of bank reserves 
D)  A leftward shift of the supply curve of bank reserves

How did the U.S.government make a profit out of its TARP investments during the financial crisis of 2007-2009?

Which of the following is an example of pork barrel spending?

If the quantity of bank reserves held at the Fed increases,________.

The unemployed workers of Perrylia could receive up to 30 weeks of unemployment insurance.However,during a recent recession,the government extended the eligibility period to 45 weeks.How is this change in policy likely to affect the labor market in Perrylia?

To the long-term expected real interest rate in the United States,the Fed needs to .

Suppose the inflation rate target is zero and the long-run federal funds target is also zero.Calculate the federal funds rate if the current inflation rate is 5 percent and real output is 4.5 percent below the trend output level.

Which of the following is likely to happen if the reserves held at the Fed by the private banks decrease?

Rapid growth in M2 is likely to lead to ________.

The economy is in a recession.The Fed could take direct action to stimulate economic activity by ________.

If the government provides a subsidy of $1 per hour to employers for hiring workers,________.

On a graph,if the x-axis measures the quantity of bank reserves and the y-axis measures the federal funds interest rate,the demand curve for bank reserves ________.

Subsidizing wages during a recession is a type of fiscal policy aimed at increasing employment.

If long-term interest rates fall,________.

During a recession,a countercyclical fiscal or monetary policy can be used to the economy by shifting .

Which of the following should be increased by the government to control the growth rate of real GDP during an expansion?

A specific policy rule announcement by the Fed decreases credibility in the Fed's ability to maintain low inflation.

Open market operations refer to the Fed's transactions with ________.

A recent study has revealed that the unemployment rate in Corinthia has been increasing over the past few years.What will be the impact of an increase in government spending in Corinthia?

When does the Fed lend through the discount window?

Which of the following is likely to happen because of quantitative easing by the Fed?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

Exam 13: Countercyclical Macroeconomic Policy

How did the U.S.government make a profit out of its TARP investments during the financial crisis of 2007-2009?

Which of the following is an example of pork barrel spending?

If the quantity of bank reserves held at the Fed increases,________.

The unemployed workers of Perrylia could receive up to 30 weeks of unemployment insurance.However,during a recent recession,the government extended the eligibility period to 45 weeks.How is this change in policy likely to affect the labor market in Perrylia?

To ________ the long-term expected real interest rate in the United States,the Fed needs to ________.

Suppose the inflation rate target is zero and the long-run federal funds target is also zero.Calculate the federal funds rate if the current inflation rate is 5 percent and real output is 4.5 percent below the trend output level.

Which of the following is likely to happen if the reserves held at the Fed by the private banks decrease?

Rapid growth in M2 is likely to lead to ________.

The economy is in a recession.The Fed could take direct action to stimulate economic activity by ________.

If the government provides a subsidy of $1 per hour to employers for hiring workers,________.

On a graph,if the x-axis measures the quantity of bank reserves and the y-axis measures the federal funds interest rate,the demand curve for bank reserves ________.

Subsidizing wages during a recession is a type of fiscal policy aimed at increasing employment.

If long-term interest rates fall,________.

During a recession,a countercyclical fiscal or monetary policy can be used to ________ the economy by shifting ________.

Which of the following should be increased by the government to control the growth rate of real GDP during an expansion?

A specific policy rule announcement by the Fed decreases credibility in the Fed's ability to maintain low inflation.

Open market operations refer to the Fed's transactions with ________.

A recent study has revealed that the unemployment rate in Corinthia has been increasing over the past few years.What will be the impact of an increase in government spending in Corinthia?

When does the Fed lend through the discount window?

Which of the following is likely to happen because of quantitative easing by the Fed?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

To the long-term expected real interest rate in the United States,the Fed needs to .

During a recession,a countercyclical fiscal or monetary policy can be used to the economy by shifting .