Which of the following is NOT an example of an automatic stabilizer? - An important policy tool for stabilizing fluctuations in the business cycle some ways they avoid or reduce each Which of the following best describes how contractionary Which issue is typically addressed by federal public policies? Increase government spending and decrease taxes. Which form of foreign aid involves many nations sharing a common goal and jointly contributing to a common fund? Which ex. - Overseas national banking and consumer credit regulation, Board of Governors of the Federal Reserve System, Consider the various actions listed below that can be taken by the Federal Reserve System. inflation is kept in check in the long run by keeping the growth of M1 and M2 on a steady path. True or False: The Australian Treasury is concerned about counterfeit money because ________________. Assume the economy is in a recession and the Federal Reserve takes the appropriate monetary policy actions. Spain True or False: Label the scenarios with the type of monetary policy lag represented in each. The choices offered in the questionnaire are science, business, and other. loanable funds market. In your meeting with the Federal Open Market Committee, the committee unanimously votes to increase the money supple using open market operations (OMOs). a. Australia's commemorative $10 banknote is an example of ________ money. a target rate of annual inflation is maintained by expanding or contracting the money supply. That's between 2% to 3% a year. real gross domestic product (GDP); unemployment. - The central bank buys bonds from private banks. If the supply of money increases, what happens in the money market? What is an example of an item that would fall under mandatory spending? Assume of 8% reserve requirement in the U.S. and that Bank of America account holds no excess reserves: During which century did the federal government begin to regulate businesses in the U.S.? Which of the following tax rates may affect an individual's decision to work harder and earn additional income? since monetary policy shifts the aggregate demand curve, it was not able to deal with the aggregate supply issues that led to the Great Recession. component of. government spending, taxes, and transfer payments; aggregate demand. 1 Business Cycles, Aggregate Demand, and Aggregate Supply Using the graph, which of the following statements is true? A decrease in the money supply will raise the interest rate, decrease investment spending and . Assume of 8% reserve requirement in the U.S. and that Bank of America account holds no excess reserves: This lowers the interest rate, which provides a larger incentive for firms to invest. Which earlier social engineering program directly influenced Johnson's initiatives? What is the difference between reserves and excess reserves in terms of banking? 1. Phil Frugal has been saving his pennies since he was five years old. A. 3. Which of the following best describes how contractionary monetary policy affects the aggregate demand curve in the aggregate demand-aggregate supply model? c. Section 11(c) of the OSH Act. Firms announce that they expect more layoffs next year than were previously anticipated. This lowers the interest rate, which M1 is the narrowest definition of the money supply. When the nominal interest rate is rising the real interest rate is necessarily rising: when the nominal interest rate is falling, the real interest rate is necessarily falling. Match each policy with the graph showing the corresponding shift. Samples of 500 pieces were selected at random, and the defective rate was found to be 0.025%0.025 \%0.025%. d. The General Duty Clause. Much of the money creation in the U.S economy is done through actions of __ and __. Expansionary monetary policy is simply a policy which expands (increases) the supply of money, whereas contractionary monetary policy contracts (decreases) the supply of a country's currency. To curb inflation and reduce the money supply,. Loans - From the standpoint of an investor, investing in a stock or bond is similar. Which of the following statements about real and nominal interest rates is correct? Which approach to fiscal policy involves and increase in taxation and decrease in spending? The law is removed and replaced with another law. True or False: provides a larger incentive for firms to invest. Using Table 37.1 and your knowledge of macroeconomics, identify the views on macro theory and policy you would want your appointees to hold. M1 is the narrowest definition of the money supply. In many countries, one of the roles of the central bank it to provide loans to distressed financial institutions. In 2013, (1) _______ suffered from an unemployment rate of 25% and huge amounts of debt. The __ enables calculation of the maximum amount of money that can be created from a dollar deposited into the banking system. Which form of communication currently plays the most immediate role in broadcasting politicians' positions on public policy? C. Money is always the best possible store of value. Chapter 11 - Money and Monetary Policy 4 23. What is the first step toward becoming a U.S. Supreme Court judge, according to Article III of the Constitution? Which federal agency handles mapping in the United States? Which of the following can change relatively quickly in the short run? $66500 Which of the following explains expansionary monetary policy in the long run? - The maximum amount of reserves available for loans. Tags: Question 7 . The term liquidity trap describes a macroeconomic scenario in which: low interest rates cause people to hoard money, making output and employment stagnate. The crisis in (5) ________ began much as it did in the U.S., when a housing bubble burst. Which of these represents the federal government's first intervention in how U.S. businesses operate? - The Federal Reserve reduces the rate of interest that it charges to commercial banks on loans, Classify the actions described as examples of expansionary monetary policy (intended to stimulate the economy), contractionary or restrictive monetary policy (meant to slow down the economy), or not an example of monetary policy. It conducted open market purchases to drive down interest rates. What is the best and quickest way to find out the purpose of specific government agency? - Some loan recipients choose to hold some cash instead of depositing all of it in banks. Since then, 40 countries around the world have begun using some form of polymer banknotes. the right. 'Crowding out' refers to which of the following? 2. increase . 2. The Federal Reserve sells bonds via the commercial banking system. Which of the following best describes the 'repeal and replace' of a law? What essential characteristic of money does fresh fish lack that most makes it ineffective? Investment is a Greece Which of the following is true of a central bank that employs inflation targeting? Consider the various actions listed below that can be taken by the Federal Reserve System. - Increases real GDP in the short run, Is not a result of contractionary monetary policy (tight money policy). b. Refer to the following figure to answer the questions that follow. Imagine that your are the writer of a newspaper column in which you answer letters from teens seeking advice. It involves spurring or slowing economic activity using taxes and government spending. Most often, the prices that are inflexible are: Which of the following best describes how expansionary monetary policy affects the aggregate demand curve in the aggregate demand-aggregate supply model? M1 is the narrowest definition of the money supply. What is Ionia's inflation gap? Which of the following will most likely result, due to the replacement of some portion of the federal personal income tax with a national sales tax? Which of the following statements best descrbes the impact of this event on the stock market? * a. more spending b. more savings c. increase in money supply d. lower interest rates e. none of the choices Expert Solution Want to see the full answer? The reserve requirement is the proportion of its deposits that a bank must keep on hand and not use to create money through making loans to borrowers. Which event is most likely an outcome of research by the Environmental Protection Agency? The U.S. Constitution states that the federal government can and should establish both an army and a navy. - Managing China's money supply. The Securities and Exchange Commission was founded by Franklin Roosevelt during the Great Depression. Which form of foreign aid involves many nations sharing a common goal and jointly contributing to a common fund? Change ($) = ? How does it affect the accounting equation? A. 2010 0% d.) The unemployment rates are falling. Who does the U.S. Constitution assign sole responsibility for the budget and federal taxation? Gross pay of $1,298 and$1,060. This type of fiscal policy is best used during times of economic downturn, and it can increase a country's gross domestic product (GDP) through a principle called the "fiscal multiplier" (or the amount in which government spending can increase the national income). Change ($) = $50 million. The fractional reserve banking system requires all banks to keep the total value of customer deposits in their vault to prevent bank runs. Which approach to fiscal policy involves and increase in taxation and decrease in spending? Significant revisions to quarterly GDP data and monthly unemployment data delay the identifications of the start of a recession. Select the proper policy recommendation or economic prediction for each of the following scenarios. Fiscal policy is the responsibility of the government. Survey at least They would decrease tax rates in order to increase disposable income, leading to more spending and, ultimately, more jobs. budget because the courts overturned key laws. Decrease disposable income and slow down the economy. Contractionary monetary policy directly pulls money out of The main contractionary policies employed. provides a larger incentive for firms to invest. It's how the bank slows . a type of fiscal policy that automatically kicks in without the discretion of policymakers. Among the roles that money serves in an economy, money is considered a unit of account. A country's _GDP- Gross Domestic Product_ is the total value of all final goods and services its people produce in one year. What are the three main tools or methods the Federal Reserve uses in implementing monetary policy? The law is removed and replaced with another law. What essential characteristic of money does cattle lack that most makes it ineffective? Year Actual Inflation rate Which of the following is a monetary policy tool of the government? What system is applied to calculate the timing of revenue and expense recognition? In the short run, ____________ prices adjust. e. Contractionary monetary policy directly pulls money out of someone who tries to influence the government in an organized way. Because either there is life on Mars or there is not, the probability of life on Mars is 0.50.50.5. What specific group takes responsibility for the actions? new.money. 6. Change in interest rate impacts the investment spending. The higher the CRR, the lower is the liquidity with the banks and vice-versa. It reflects the repeated _expansions___ and __Contractions___of the economy. Which of the following tax codes is most progressive? Which step in the rule-making process makes the new regulations available to the public for review? (43) Investment is a component of aggregate demand, so this shifts aggregate demand to the left. Which statement best describes what will most likely happen, from an economic . securities as a form of monetary policies An economy is facing moderate output growth but significantly high inflation rates. Determine the 35% recommended maximum for monthly housing costs. Experts are tested by Chegg as specialists in their subject area. Global economic interdependence make dollarization: less risky because El Salvador is more likely to be expecting the same economic conditions as those in the U.S. Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams, Don Herrmann, J. David Spiceland, Wayne Thomas, PTRS 704 Clinical Emergencies (final exam). Policies help guide organizations--including governments--in achieving their goals. Copper When the economy is growing too slowly (recession) or too quickly (high inflation), the two approaches the government can use, according to economists, include which of the following? The purpose of contractionary fiscal policy is to slow growth to a healthy economic level. the left. Which statement is an example of and open market operation? If the nominal interest rate is 4 percent and the inflation rate is 3 percent, then the real interest rate is 7 percent. As it relates to the European Union, what is the ECB? Conversely, a monetary policy that raises interest rates and reduces borrowing in the economy is a contractionary monetary policy or tight monetary policy. B. Assume a required reserve ratio of 10%. Change ($) = ? large quantities of counterfeit banknotes could decrease the value of Australian money, Suppose that a central bank pursues expansionary monetary policy by purchasing bonds. American Government module 3 Exam study guide, Module 5 Principles of American Democracy, Government in America: Elections and Updates Edition, George C. Edwards III, Martin P. Wattenberg, Robert L. Lineberry. Because banks are in the business of lending money, they will ____ so savers don't need to. . M1 is the narrowest definition of the money supply. It began the process of school desegregation. the results with the class. The government has just lowered personal income taxes. Explain your reasoning. Banks in Ruritania have a required reserve ratio of 5%. The Fed can _____________ the money supply by lowering this rate. someone who tries to influence the government in an organized way. CONCEPT International Comparisons 25 Select the statement below that is FALSE regarding labor force participation by . Higher disposable income, higher consumption, higher real GDP, lower unemployment. As a result, expected income increases. Loans will become cheaper and the money supply will increase. Which of the statements best describes the monetary rule, as proposed by the economist Milton Friedman? What would be the most likely predictions people make about the inflation rate for 2016 based on adaptive and rational expectations theories, respectively? . Which of the following best describes how contractionary Business. - Supervises and regulates member banks Printing money on polymer, as opposed to paper, enhances money's role as a ______________. The Taylor rule helps the chairman to determine the target: Calc. What level of government levies sales tax? It limits the printing and circulation of new money. - The President signs a tax cut bill intended to encourage additional consumer spending. Which of the following best describes the 'repeal and replace' of a law? What are the primary goals of fiscal and monetary policy? The SRAS curve shifts rightward. Researchers announce that they anticipate a breakthrough in the effectiveness of training for low-skills workers within the next decade. What level of government levies sales tax? Which one of the following statements is correct? Expert Answer. A foreign entity holding cash is considered a leakage in the economy. 2015 6%. The government will use its fiscal policy toolkit to do what? Which of the following ensures the right of workers to seek safety and health on the job without fear of punishment? Which form of communication currently plays the most immediate role in broadcasting politicians' positions on public policy? Suppose you win on a scratch-off lottery ticket and you decide to put all of your $3,500 winnings in the bank. Where do the bills that are introduced to Congress originate? A. In 2007, the Federal Reserve lowered interest rates in order to stimulate the economy. Holding all else constant, in the short run, an increase in the money supply can cause: Refer to the following figure to answer the questions that follow. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. the left. The Federal Deposit Insurance Corp. (FDIC) protects bank depositors from bank failure. Money can be created in the US economy only by printing more paper money. Match each policy with the graph showing the corresponding shift. Investment is a component of aggregate demand, so this shifts aggregate demand to the left. Expansionary fiscal policy is the opposite of contractionary fiscal policy. It limits the printing and circulation of new money. The Supreme Court determines the constitutionality of laws. Question 13 A system where goods and services are exchanged directly without a common unit of account is called the: Correct Answer: barter system. Compare the 95%95 \%95% confidence interval for the proportion of students who would like to pursue science with the proportion who would like to pursue business. Money leakages, however, are quite high. To enforce the rule of the law, but also ensure Congress was not creating laws or policies that were in direct violation of the rights afforded by the Constitution. What is the appropriate contractionary fiscal policy response when inflation goes from a 3% to 10% annual rate and real GDP rises from 2% to 10%? Which resource management agency would most likely set guidelines for oil pipelines and windmills? a. The Great Recession. - The President signs legislation that extends the duration of unemployment benefits for people that are out of work It is typically implemented by a central bank or a monetary authority to control the money supply and maintain price stability. Remember, the economic health of the entire nationand your chances for reelectionmay depend on your selection. The ABC Toy Company makes a few types of toy cars on one of its production line. Which goal of foreign policy in included in all the other goals? Which of the following would be LEAST likely to occur during an expansionary gap? True or False: During which century did the federal government begin to regulate businesses in the U.S.? Investment is a Suppose that you are employed as an advisor to the central bank. Bill of 1944? Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams. They must fall within the powers assigned to presidents by the Constitution. - the long-term stability of Switzerland's economy, Suppose a wealthy family decides to move $50 million from their Swiss bank account to their Bank of America account. Option C Due to expansionary monetary policy, LM curve would shift to right leading to decrease in market interest rate . Contractionary monetary policy directly pulls money out of the loanable funds market. The Federal Reserve, which maintains reserve banks across the United States, is responsible for monetary policy. -to protect constitutional rights, safety, and fairness -to ensure that property rights are protected Which statement best describes the idea of monetarism? Which goal of foreign policy in included in all the other goals? Suppose a wealthy family decides to move $50 million from their Swiss bank account to their Bank of America account. 1 An economy that grows more than 3% creates four negative consequences. Banks in Ruritania have a required reserve ratio of 5%. This lowers the interest rate, which Cattle is not an effective form of money. Which issue is typically addressed by federal public policies? questions relating to the Problem Solving framework statements highlighted in the Coursebook. - The Federal Reserve increases the percentage of deposits that commercial banks are required to keep in their vaults, Contractionary (restrictive) monetary policy, Classify the actions described as examples of expansionary monetary policy (intended to stimulate the economy), contractionary or restrictive monetary policy (meant to slow down the economy), or not an example of monetary policy. provides a larger incentive for firms to invest. Investment is a Transcribed Image Text: Suppose the demand for a product is P = 150-Q and that the marginal cost of producing the product is $30. The interest rate banks charge each other for very short-term loans is the ___________. When the economy is __, the money leakage tends to rise; this tends to slow money creation. securities, which results in a $2000 billion decrease in the money supply. The economy has entered a recession with high unemployment. As a result of the Great Recession, there were significant expansionary monetary policy interventions. Another potential role of central banks is to foster confidence in the banking system by making sure that people can retrieve their money even if a bank goes bankrupt.