inflation and unemployment Using the GDP model, taxes initiated to finance government spending are subtracted from _. fight inflation The Phillips Curve shows the trade-off between _. the amount of additional income spent in the economy Which of the following is an example of expansionary policy? Decrease in taxes Contractionary fiscal policy is enacted in order to _. The Marginal Propensity to Consume (MPC) is _. Which of the following is NOT included in the expenditure approach for calculating GDP? Consumer income Which of the following statements about expansionary fiscal policy is true? It is when government expenditures exceeds tax revenues. the purchase of a stock sing the GDP model, which of the following often happens during a recession? Government spending (G) will be greater than taxes (T). ![]() encourage households and businesses to spend money In the GDP model, investment (I) could be considered all of the following EXCEPT _. selling Treasury bonds Which of the following is associated with contractionary monetary policy? Increasing the reserve requirement Expansionary policy is created in order to _. All of the following are examples of expansionary policy EXCEPT _. Which of the following statements is associated with deflation? Prices fall, but loan payments stay the same. Which of the following statements regarding inflation is true? When inflation is extreme, it can destroy a country's currency. Which of the following statements regarding goals of monetary policy is FALSE? The Fed might seek to reduce inflation by increasing the money supply. ![]() Why would banks need to borrow directly from the Fed? To meet the reserve requirement Which statement below is true about the discount rate? It is the rate that the Fed charges member banks for short term loans. banks who lend excess reserves to other member banks Which statement below is true about the discount rate? This is the rate used when banks borrow directly from the Fed. meet reserve requirements The federal funds rate is paid to _. interest rates Fed member banks enter the federal funds market in order to _. When the Fed sells bonds, the result is an increase in _. Treasury sends the money it prints directly into circulation. 2 $200 What is the result when the Federal Reserve buys Treasury bonds? More currency in the hands of the public Which statement is NOT true regarding the way that the Federal Reserve controls the money supply? The U.S. 4 $800 If the reserve requirement of a bank is 50%, then the multiplier effect will be _ and $100 in M1 will increase the money supply by _. 5 $250 If the reserve requirement of a bank is 25%, then the multiplier effect will be _ and $200 in M1 will increase the money supply by _. physical currency and demand deposits If the reserve requirement of a bank is 20%, then the multiplier effect will be _ and $50 in M1 will increase the money supply by _. Dollar bills, checking account balances, money market mutual funds Which of the following statements regarding different types of money is true? Time deposits belong in the least liquid category of money. How does the Federal Reserve prevent runs on banks? By acting as a lender of last resort to member banks Select the answer below that has the three examples of money in order from most liquid to least liquid. Which of the following statements about the Federal Reserve is true? The members of the Board of Governors of the Federal Reserve are appointed for terms of 14 years. Which of the following statements regarding central banks is true? A central bank is charged with the regulation of money supply and interest rates. Which of the following statements is NOT true of the Federal Reserve? The Federal Reserve prints more money to prevent runs on banks. Which of the following describes a way that central banks strengthened the value of currency? Over time, the banking system becomes less reliant on the gold standard. currency traders Which of the following statements regarding central banks is true? A central bank has the sole authority with respect to the money supply. ![]() ![]() the control of the English bank over the colonies Before a Central Bank was established in the United States, people known as _ were able to buy and sell the monies from individual states. Some of the founding fathers were initially against a Central Bank because _.
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