ECON223

1.

1 point

Contractionary monetary policy results in

aggregate demand to rise and the price level to rise

aggregate demand to fall and the price level to fall

aggregate demand to rise and the price level to fall

aggregate demand to fall and the price level to rise

2.

1 point

Suppose you deposit $100 into your checking account at Wells Fargo Bank. If the required reserve ratio is 5 percent, what is the maximum change in money supply including your initial deposit?

Calculation:(100/5)*100=2,000

2000

3.

1 point

Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is below the natural unemployment rate, and wages and prices are rising. The monetary policy would be to

A to B

B to C

C to B

A to E

C to D

4.

1 point

Mobile computer devices have increased the productivity of many workers in the U.S. What impact have mobile computer devices had on the per-worker production function?

It became flatter.

It shifted up

It shifted down

It became linear

5.

1 point

Which of the following is not counted in M1?

checking account balances

credit card balances

coins in circulation

currency in circulation

travelerʹs check balances

6.

1 point

The Fed can increase the money supply by

interest rates, tax rates, and government spending

tax rates, government purchases, and government transfer payments

open market operations, discount policy, and reserve requirements

open market operations, the exchange rate of the dollar against foreign currencies, and government purchases

7.

1 point

The Federal Reserve can help U.S. banks avoid a bank run by

printing money

acting as a lender of last resort

raising the discount rate

increasing the required reserve ratio

8.

1 point

If there is high inflation, which of the following functions of money is not true?

It is a means of production

Its is a unit of account

It is a store of value

It is a medium of exchange

9.

1 point

What is the most important benefit of money in an economy?

Money allows for the exchange of goods and services

Money encourages people to produce all of their own goods (self-sufficiency) and therefore increases economic stability

Money makes exchange easier, leading to more specialization and higher productivity

Money allows for the accumulation of wealth

10.

1 point

In the figure above, if the economy is at point A, the central bank should

lower interest rates

raise interest rates

lower income taxes

raise income taxes

11.

1 point

If you take $500 from your pocket and put it in your bank’s savings account, then M1 will ________ and M2 will ________.

increase; increase

not change; increase

decrease; increase

decrease; not change

increase; decrease

12.

1 point

When the Fed lowers banks’ reserve requirement, bank reserves _____ and the money supply____.

increases; increases

increases; decreases

decreases; increases

decreases; decreases

13.

1 point

The quantity theory of money predicts that, in the long run, inflation results from the

velocity of money growing at a faster rate than real GDP

velocity of money growing at a lower rate than real GDP

money supply growing at a lower rate than real GDP

money supply growing at a faster rate than real GDP

14.

1 point

Which of the following policies will NOT likely promote long-run economic growth?

increasing vaccinations against infectious diseases

undergoing political reform to decrease corruption

enacting stronger laws to protect property rights

imposing stricter regulations to limit foreign direct investment