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Macroeconomics 201 Final Exam

Question # 00438139
Subject: Economics
Due on: 12/07/2016
Posted On: 12/07/2016 04:32 AM

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Answer all 25 multiple choice questions.
1. Which is not a function of money?
a) unit of account; b) medium of exchange; c) means of measure; d) store of value
2. Since the 1980s, it has generally been the view that the money supply:
a)
b)
c)
d) is completely controlled by the central bank;
cannot be controlled by the central bank;
is completely controlled by the Treasury;
cannot be controlled by the Treasury 3) Which of the following is not one of the three kinds of demand for money in Keynes?
a) speculative; b) precautionary; c) administrative; d) transactions
4) Which of the following is not one of the ways the Fed can use to try to affect the
money supply?
a) change the discount rate; b) change the fed funds rate;
c) change the reserve requirement ratio;
d) open market operations
5) Expansionary policy is used to:
a)
b)
c)
d) try to fight inflation;
try to decrease output, income, and employment;
try to increase output, income, and employment;
try to increase deflation 6) There is a tension between these two characteristics of banks in a fractional reserve
banking system:
a) private profit seeking enterprises and susceptible to runs;
b) private profit seeking enterprises and engage in money creation;
c) engage in money creation and susceptible to runs;
d) engage in runs and susceptible to money creation
7) The liquidity trap is:
a) the horizontal portion of the money demand function;
b) when interest rates are so low people do not think they can go any lower;
c) when interest rates are insensitive to changes in the Money supply;
d) all of the above 1 8) The limits to KEMP are:
a) I may be insensitive to changes in i, i may insensitive to changes in Ms, Y may be
insensitive to changes in I;
b) I may be insensitive to changes in Y, I may be insensitive to changes in i, i may be
insensitive to changes in Ms;
c) I may be insensitive to changes in i, i may be insensitive to changes in Ms, Y may be
insensitive to changes in i;
d) I may be insensitive to changes in i; Ms may be insensitive to changes in i, Y may be
insensitive to changes in I
9) The limits to KAIMP are:
a) only works for demand-pull inflation, Fed may overshoot its mark and cause a
recession;
b) only works for cost-push inflation, Fed may overshoot its mark and cause a recession;
c) only works for demand-push inflation, Fed may overshoot its mark and cause a
recession;
d) only works for cost-pull inflation, Fed may undershoot its mark and cause a recession
10) In the endogenous view of the money supply:
a) the Ms curve is vertical;
c) the Md curve is vertical; b) the Ms curve is horizontal;
d) the Md curve is horizontal 11) Deficit Hawks view deficits as causing:
a) high investment rates; b) deflation; c) high interest rates; d) all of the above
12) Deficit Doves believe that:
a) deficits cause high interest rates; b) high interest rates cause bigger deficits;
c) deficits are always good; d) all of the above
13) In the functional finance view, bond sales:
a) finance deficit spending; b) add to bank reserves depleted by deficit spending;
c) drain excess reserves to maintain short term interest rates;
d) none of the above
14) In the functional finance view, taxes:
a) finance government spending;
b) create a demand for government bonds;
c) create a demand for government currency;
d) all of the above 2
15) In the functional finance view:
a) the government needs the public’s money to spend;
b) the public needs the government to accept its money;
c) the government needs the public to need its currency;
d) both b and c
16) The view that the national debt is a burden on future generations is held by:
a) deficit hawks; b) deficits doves; c) functional finance; d) a and b
17) The view that the government is the monopoly issuer of the currency is held by:
a) deficit hawks; b) deficit doves; c) functional finance; d) b and c
18) Which describes KEMP:
a) Ms? i? I? Y?;
c) Ms? i? I? Y?; b) Ms? i? I ?-- Y?;
d) Ms? i? I? P? 19) In the endogenous money view:
a) deposits create loans;
c) loans create deposits; b) reserves create loans;
d) deposits create reserves 20) The most common method the Fed uses to try to affect the money supply is:
a) reserve requirement ratio; b) discount rate; c) open market operations; d) fed funds rate
21) What are the tools of monetary policy?
a) government spending and taxes;
b) money supply and interest rates;
c) money demand and interest rates;
d) government supply and tax rates
22) In the endogenous view of the money supply, everything begins with:
a) the supply of credit;
c) the supply of loanable funds; b) the demand for credit;
d) none of the above 3 23) The Fed can try to increase the money supply by:
a) selling discount rates;
b) buying discount rates;
c) selling bonds;
d) buying bonds
24) The Fed can try to decrease the money supply by:
a) raising the discount rate;
b) lowering the discount rate;
c) lowering the reserve requirement ratio;
d) raising the money supply
25) When money is used to settle debt it is functioning as:
a) a means of purchase;
c) a means of payment; b) a means of value;
d) a medium of account Those who enjoyed the class, consider the Economics major or minor!

Tags exam final macroeconomics money functional finance rates high cause demand discount changes view government deficit supply funds endogenous create decrease doves selling iinsensitive susceptible deflation hawks curve deficits market mark inflation reserves works

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