Econ 231 exam 3 || with 100% Error-free Answers.
Most economists agree that the focus of the fiscal policy is to correct answers Balance aggregate
demand and aggregate supply
The fallacy in the strict crowding-out argument comes from supposing that correct answers The
economy's flow of savings is fixed
If personal income taxes are increased disposable income and consumption correct answers
Decrease
Money is an imperfect store of value when correct answers a. the rate of inflation is high.
One of the practical issues in the choice of government spending or taxes to change aggregate
demand is how large a correct answers Government sector we want
During the financial crisis of 2007 - 2009 the US government determine that correct answers A I
G was too big to fail but Lehman Brothers was not
The money supply contracts when the Fed correct answers sells government securities
The central bank is said to monetize the deficit when it correct answers purchases the bonds that
the government issues.
Most observers believe that the monetary policy correct answers Is more important than the
fiscal policy
The early Goldsmith issued money in the form of correct answers Receipts for the acceptance of
gold deposits
One inconvenience of commodity money as the need for correct answers Money to be divisible,
uniform quality, portability
Bank lending and deposits tend to change as interest rates change can the Fed counteract this
tendency? correct answers a. Yes, through its ability to affect the money supply.
Which graph in figure 27-2 best reflects a supply siders view of the impact of an increase in the
personal income tax right correct answers Graph one
Expansionary fiscal policy can mitigate recessions but it also correct answers Raises the budget
deficit
Banks that are managed in a very safe and conservative manner can be expected to earn correct
answers Low and consistent profits
, If the economy is in an inflationary gap and the government attempts to balance the budget the
affect will be to correct answers Continue inflationary pressures
During a period of economic depression such as has existed for a long period in Japan, a profit
oriented bank will act in such a way that correct answers Makes the depression worse
The feds tools of monetary policy are correct answers Open market operations, lending to banks,
reserve requirements, and paying interest on reserves
If the Fed sells a T-bill to an individual rather than to a commercial bank, how will this affect the
money supply correct answers It will decrease the money supply
Tax and spending policies affect aggregate demand only after some time elapses. Due to those
time lags, fiscal policies end up getting based on correct answers Forecast on the future state of
the economy that are often inaccurate
If the president and Congress agree to balance the budget during a recession then the appropriate
monetary policy is correct answers Increase the growth of the money supply
They Federal open market committee consist of correct answers The board of governors and five
district bank presidents
The oversimplified formula for the multiplier yields a number that is too large due to the
exclusion of correct answers Variable imports, changes in the price level, income taxes
Which of the following statements about the national debt has most validity correct answers If
only Americans hold the debt, then payments of interest and principal are simply transfers from
some Americans to other Americans
Economist who argue in favor of rapid deficit reduction claim that deficit reduction will correct
answers Reduce crowding out, increase investment, and increase AS
The primary benefit of a monetary system of exchange compared to a barter system is the
increased correct answers efficiency in arranging transactions
Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their
funds into the bond market. What only about 30 percent of surveyed investors knew was that as
bond prices rise, interest rates correct answers Fall in reaction to the increased demand for bonds
Thank regulators are concerned about the safety of depositors because correct answers Bank
failures were common throughout mostly US history and have even occurred in recent decades,
in the absence of federal insurance depositors would lose their money if a bank failed, nervous
depositors may rush to withdraw their account and produce a run that can threaten even a sound
bank
Fiat money is money correct answers because a government says it is.
Most economists agree that the focus of the fiscal policy is to correct answers Balance aggregate
demand and aggregate supply
The fallacy in the strict crowding-out argument comes from supposing that correct answers The
economy's flow of savings is fixed
If personal income taxes are increased disposable income and consumption correct answers
Decrease
Money is an imperfect store of value when correct answers a. the rate of inflation is high.
One of the practical issues in the choice of government spending or taxes to change aggregate
demand is how large a correct answers Government sector we want
During the financial crisis of 2007 - 2009 the US government determine that correct answers A I
G was too big to fail but Lehman Brothers was not
The money supply contracts when the Fed correct answers sells government securities
The central bank is said to monetize the deficit when it correct answers purchases the bonds that
the government issues.
Most observers believe that the monetary policy correct answers Is more important than the
fiscal policy
The early Goldsmith issued money in the form of correct answers Receipts for the acceptance of
gold deposits
One inconvenience of commodity money as the need for correct answers Money to be divisible,
uniform quality, portability
Bank lending and deposits tend to change as interest rates change can the Fed counteract this
tendency? correct answers a. Yes, through its ability to affect the money supply.
Which graph in figure 27-2 best reflects a supply siders view of the impact of an increase in the
personal income tax right correct answers Graph one
Expansionary fiscal policy can mitigate recessions but it also correct answers Raises the budget
deficit
Banks that are managed in a very safe and conservative manner can be expected to earn correct
answers Low and consistent profits
, If the economy is in an inflationary gap and the government attempts to balance the budget the
affect will be to correct answers Continue inflationary pressures
During a period of economic depression such as has existed for a long period in Japan, a profit
oriented bank will act in such a way that correct answers Makes the depression worse
The feds tools of monetary policy are correct answers Open market operations, lending to banks,
reserve requirements, and paying interest on reserves
If the Fed sells a T-bill to an individual rather than to a commercial bank, how will this affect the
money supply correct answers It will decrease the money supply
Tax and spending policies affect aggregate demand only after some time elapses. Due to those
time lags, fiscal policies end up getting based on correct answers Forecast on the future state of
the economy that are often inaccurate
If the president and Congress agree to balance the budget during a recession then the appropriate
monetary policy is correct answers Increase the growth of the money supply
They Federal open market committee consist of correct answers The board of governors and five
district bank presidents
The oversimplified formula for the multiplier yields a number that is too large due to the
exclusion of correct answers Variable imports, changes in the price level, income taxes
Which of the following statements about the national debt has most validity correct answers If
only Americans hold the debt, then payments of interest and principal are simply transfers from
some Americans to other Americans
Economist who argue in favor of rapid deficit reduction claim that deficit reduction will correct
answers Reduce crowding out, increase investment, and increase AS
The primary benefit of a monetary system of exchange compared to a barter system is the
increased correct answers efficiency in arranging transactions
Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their
funds into the bond market. What only about 30 percent of surveyed investors knew was that as
bond prices rise, interest rates correct answers Fall in reaction to the increased demand for bonds
Thank regulators are concerned about the safety of depositors because correct answers Bank
failures were common throughout mostly US history and have even occurred in recent decades,
in the absence of federal insurance depositors would lose their money if a bank failed, nervous
depositors may rush to withdraw their account and produce a run that can threaten even a sound
bank
Fiat money is money correct answers because a government says it is.
