1) Which of the following is NOT an example of the monetary policy action taken by the government? a) An increase in military spending b) Buy/sell securities c) Open market operations d) A change in the reserve requirement 2) Money is legal tender if a) it is backed by gold or silver b) it is in a bank account c) it is commodity money d) people willingly accept it in payment of debts 3) Banks earn a profit on the difference between a) liabilities and deposits b) deposit and loan balances c) interest charged on loans and interest paid on deposits d) interest charged to depositors and interest offered to borrowers 4) Which of the following is not a tool of fiscal policy? a) government purchases b) money supply c) Social Security program d) taxes 5) In a recession, which of the following is the most likely policy stance of the passive approach? a) reduce interest rates b) let the economy fix itself c) cut taxes d) increase the money supply 6) The Federal Reserve a) is answerable to the President and must do his bidding b) is more concerned with generating income than it is with achieving price stability c) is not considered one of the more independent central banks d) is insulated from politics by its 14-year appointments and its own source of income 7) If a bank receives $1,000 deposit, its ability to make loans increases by $1,000. a) False b) True 8) When interest rates decrease, What will happen to investment? a) They will stay the same b) They will decrease c) They will increases 9) Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1. If the bank has $5 million in excess reserves, then its actual reserves must be a) $10 million b) $15 million c) $20 million d) $5 million 10) What is the policy stance of passive approach? a) Reduce interest rates b) Increase government spending c) Economy will fix itself d) Cut taxes

Econ 50

by
Embed

Leaderboard

Theme

Options

Switch template

Continue editing: ?