Macroeconomics 201 Final Exam

Question # 00438139 Posted By: Prof.Longines Updated on: 12/07/2016 04:32 AM Due on: 12/07/2016
Subject Economics Topic Macroeconomics Tutorials:
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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!

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