W8 Assessment “Final Exam”

The use of money as a medium of exchange represents the mostimportant service that money renders.

True

False

Currency includes demand deposits.

True

False

The money supply known as M1 includes all assets that are good storesof value.

True

False

A primary tool of the Federal Reserve System is open market operations.

True

False

Commercial banks and credit unions create money in concert with theFed.

True

False

Providing a secure place for savings is not a major function of financialinstitutions.

True

False

The Fed’s reserve requirement ratio can reduce the monetary base.

True

False

If
bankers want to retain reserves of 25% against all deposits, if the
Fedissues $100 billion in currency, and if private individuals keep all
moneyin banks, then once the banks are fully loaned up, the money supply
willconsist of $400 billion in demand deposits.

True

False

The
Long-run Aggregate Supply Curve that is compatible with the
classicalmacroeconomc model is a vertical line at full employment.

True

False

When the federal government spends more than it collects, it must issuemore debt or more monetary base.

True

False

Keynesians tend to believe that massive tax cuts and new government spending are cures for recession.

True

False

There are currently 13 Federal Reserve Districts.

True

False

One of the 3 tools of the Federal Reserve is fiscal policy.

True

False

Monetary policy of the Federal Reserve affects the monetary base toachieve its goals of rates of inflation and interest.

True

False

The buying of securities in the open market by the Federal Reserve will augment the monetary base of the economy.

True

False

The
selling of securities in the open market by the Federal Reserve
willactually decrease the monetary base by reducing the amount the
bankingsystem will ultimately be able to lend.

True

False

The
Federal Funds Market is actually monitored and manipulated by
theFederal Reserve, but individuals can actually enter the market
andborrow funds if desired.

True

False

The
short-run Phillips curve is a curve that shows the relationship
betweenthe inflation rate and the pure interest rate when the natural
rate ofunemployment rate and the expected inflation rate remain
constant.

True

False

When
interest rates are rising, the tendency is for holders of M1 to get
outof M1 and move into M2 and M3 due to the opportunity costs of
holdingM1.

True

False

The science of macroeconomics:

The tax cuts passed by Congress in 2002 to help move the economy more rapidly toward potential GDP are an example of:

In
the post World War II period, considerable growth in total production
took place in the U.S. But at the same time, businesses were dumping
their waste into the Great Lakes with minimal cost to themselves,
significantly polluting the bodies of water as a result. This occurrence
is an example where:

A Phillips curve measures the relationship between:

In order for the United States to repay its international debt, the United States would need to:

If the CPI was 122.3 at the end of 2007 and 124.5 at the end of 2008, the inflation rate over these two years was:

A demand-pull inflation initially is characterized by:

The labor force is the sum of the:

In
2005, Armenia had a real GDP of approximately $4.21 billion and a
population of 2.98 million. In 2006, real GDP was $4.59 billion and
population was 2.97 million. From 2005 to 2006, Armenia’s standard of
living ________.

According
to real business cycle theory, a fall in the real interest rate
________ current labor supply and ________ current employment.