EC0 302 Milestone 3 Macroeconomics

EC0 302 Milestone 3 Macroeconomics Which statement below corresponds to the term "Federal Reserve?" CONCEPT U.S. Central Bank: Federal Reserve 2 Which of the following is the reason why individuals are more certain of the value of their currency with central banks? CONCEPT Central Banks 3 Under which of the following circumstances would a fractional reserve system fail? CONCEPT Fractional Gold Standard/Fiat Currency 4 Which of the following definitions corresponds to economic growth? CONCEPT Economic Growth 5 Which of the following is an example of deflation? CONCEPT Goals of Monetary Policy 6 When Treasury bills are auctioned off, if buyers are willing to pay $900 for a $1,000 treasury bill, the government is being asked to pay what percent in interest, if the bills mature after a period of one year? CONCEPT Funding Fiscal Policy 7 Select the statement below that is true. CONCEPT Open Market Operations 8 If the MPC is 0.5 and the government increases spending by $250 billion, which of the following will be the effect this change has on the economy? CONCEPT Expansionary Policy 9 Which of the following is NOT one of the three ways that money can be spent that contribute to GDP? CONCEPT Expenditure and Income Equations 10 Using the expenditure approach and the information shown here, which of the following is the GDP? Individual Purchases: $5 billion Government purchases: $10 billion Business investments: $5 billion Imports: $5 billion Exports: $10 billion • $45 billion • $35 billion • $25 billion • $15 billion CONCEPT Expenditure and Income Equations 11 Select the statement below that is FALSE regarding the history of the development of central banks. CONCEPT Central Banks 12 Which of the following is the Federal Reserve Committee responsible for making key decisions about interest rates and the money supply? CONCEPT U.S. Central Bank: Federal Reserve 13 Which of the following is an example of contractionary monetary policy? CONCEPT Expansionary/Contractionary Policy and the Multiplier Effect 14 The discount rate is charged to . CONCEPT Discount Rate 15 Which of the following is the reason the United States had been opposed to the idea of central banks in the past? • It was easier to make money trading currency using the old banking methods. • The risk of runs and panics was still too high. • The value of currency was uncertain. • The British central bank had exerted control over the colonies. CONCEPT History of the Central Bank 16 Select the example below that is M1 type of money. CONCEPT M0, M1, M2 17 If the reserve requirement of a bank is 33%, then $100 of M0 will lead to how much of M1? CONCEPT Reserve Requirement 18 Gold and other precious metals are easy to store for long periods of time because they will not spoil, making them an example of which of the following? CONCEPT History of Money 19 Which of the following can offset rising interest rates due to government borrowing? CONCEPT Interest Rates 20 Which of the following regarding the federal funds market is NOT true? • Transactions influence the amount of money that banks have on hand to meet the reserve requirement at the end of the day. • The federal funds market developed to help banks meet their reserves requirements at the end of the day. • The Fed directly controls the federal funds rate. • FOMC meetings set a target for the federal funds rate. CONCEPT Federal Funds Market 21 Which statement below about expansionary fiscal policy is true? CONCEPT Expansionary Policy 22 Which of the following is not a goal of monetary policy? • Promote maximum stable employment • Promote the increase of printed paper currency CONCEPT Goals of Monetary Policy 23 Which statement below regarding the use of a gold standard is FALSE? CONCEPT