ECON 200 Final Study Guide Rated A+
marginal
rise; downward-sloping
cyclical
money market deposit accounts
bank deposits at the Federal Reserve equal $0
$4 million; $40 million
federal open market committee
banks will have a reserve deficiency
federal funds
bank's reserves increase
buys;...
Ans: If an individual pays an additional $0.30 in taxes as a result of a $1.00 increase in
income, that individual has a(n)_____________ tax percent of 30 percent.
2). Rise; downward-sloping
Ans: Suppose that in a certain nation the flat income tax rate of 40 percent is reduced
to 35 percent and as a result taxable income rises from $400 billion to $600 billion. Tax
revenues _____________, indicating the nation is on the _______________ portion of its Gaffer
curve.
3). Cyclical
Ans: That part of the deficit due to output being below Natural Real GDP is called the
__________ deficit
4). Money market deposit accounts
Ans: Which of the following is not included in M1?
5). Bank deposits at the federal reserve equal $0
Ans: If reserves equal $29 million and vault cash equals $29 million, it follows that
6). $4 million; $40 million
Ans: If excess reserves are $10 million, (total) reserves are $14 million, and the
required reserve ratio is 10%, then required reserves equal __________ and checkable
deposits equal ____________.
7). Federal open market committee
Ans: The board of governors of the Federal Reserve is part of a larger policy-making
group called the
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, 8). Banks will have a reserve deficiency
Ans: If banks are currently holding zero excess reserves and the Fed raises the required
reserve ratio, which of the following will happen?
9). Federal funds
Ans: When one commercial bank borrows from another commercial bank, it pays the
______________ rate.
10). Bank's reserves increase
Ans: When Bank A obtains a loan from the Fed, the
11). Buys; fed; lowers; reserves
Ans: Here is how an open market sale works: A commercial bank ______________
government securities to (from) the Fed, which lowers the bank's deposits at the
___________ and _______________ the bank's ____________.
12). None of the above
Ans: Which of the following will increase money supply?
13). Purchase; decrease
Ans: Suppose that the current federal funds rate is above the federal funds target rate.
In order to lower the federal funds rate the Fed will ____________ securities on the open
market which will ______________ the supply of reserves in the market for reserves,
pushing the rate closer to the target rate.
14). Monetarists believe that control of the money supply is very important to the health of the
economy
Ans: Which of the following statements is true?
15). Can be turned into a theory of the macroeconomy if certain assumptions are made about
some of its variables
Ans: The equation of exchange
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