Government collects more in taxes than it spends

What is the National Debt?

Accumulation of all the budget deficits over time

What is the role of Monetary Policy?

Influencing price stability and bringing trust back to our currency

The Demand for money shows the relationship between...

Interest Rates and Quantity of money demanded

Anything that is accepted in payment of goods and services

What is the purchasing power?

Amount of goods and services a unit of money can buy

To act as money, something must be...

Measurable, Divisible, Portable, and Durable

According to Open Market Operations, to decrease the money supply, the FED should...

Sell government securities (Bonds)

The reserve requirement is the...

Percent of deposits that banks must hold in reserve

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Chapter 4 Test 2021

27 termsStudBud Administration181 plays

Money and Monetary Policy

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Questions 27

Answers

1
What should the FED do to the reserve requirement if there is inflation?
Wait, time will tell
Increase the reserve ratio
Decrease the reserve ratio
Make a new law to fix this
2
Timing does not play a role in tracking the deficit.
False
True
3
Which of the following is an example of Commodity Money?
Livestock
Euro
U.S. Dollar
Pound Sterling
4
Problems of timing include...
All of the above
Operational Lag
Administrative Lag
Recognition Lag
5
Which statements are true regarding INCREASING THE RESERVE RATIO
Money supply decreases, interest rates up, and AD down
All of the above
Banks hold more money and have less excess reserves
Banks create less money
6
What makes money effective?
Scarce
Portable and Dividable
All of the above
Generally Accepted
7
Which group sets and adjusts the money supply in the economy?
The Reserve Requirement
Your personal bank
Your mom
The FED
8
If the FED decreases the money supply, what may occur?
Shortage
World domination
Nothing
Surplus
9
What is a surplus?
The maximum amount to borrow money
A Treasury Bond
Government collects more in taxes than it spends
Government spends more than it collects in taxes
10
What is the National Debt?
Billions of dollars that other countries owe the U.S.
Accumulation of all the budget deficits over time
Money that the U.S. owes, but will be paid off soon
When the government's expenditures exceeds its revenue
11
What is the role of Monetary Policy?
Taxes
Watching how much the government spends
Influencing price stability and bringing trust back to our currency
Printing more money!!
12
A change in interest rates/money supply refers to...
Fiscal Policy
Monetary Policy
13
Inflation ______ the purchasing power, while rapid inflation ________ acceptability.
Increases, Decreases
Decreases, Decreases
Increases, Increases
Decreases, Increases
14
Is when the government's expenditures exceeds its revenue
The National Debt
Budget Deficit
The Federal Reserve
Saving Deficit
15
What is the term for, "Wants what you have and also has what you want"
Barter System
The National Debt
The Reserve Requirement
Fiat Money
16
The Demand for money shows the relationship between...
Interest Rates and Quantity of money demanded
Assets and money
Money supply and what is wanted
Air and water
17
What is money?
Never loses its value over long periods of time
Anything that is accepted in payment of goods and services
Anything green and paper-like
Only Gold (Keep your eyes on the prize)
18
Which of the following is a cause of the U.S. Debt?
Consumers for spending too much money
Low funds in the Reserve Requirement
Leadership Deficit
My extremely low bank deposits
19
What is the purchasing power?
A list by the FED of what is available for consumers to buy
The fact that consumers are limited to what we can buy
The power to purchase whatever you desire
Amount of goods and services a unit of money can buy
20
To act as money, something must be...
Measurable by the FED
Measurable, Divisible, Portable, and Durable
Measurable, Divisible, Green, and Gold
Durable, Portable, Countable, and a Commodity
21
What are the functions of money?
Money is a medium of exchange
Money is a store store of value
All of the above
Money is a unit of account
22
According to Open Market Operations, to decrease the money supply, the FED should...
Implement Monetary Policy
Buy government securities (Bonds)
Sell stocks
Sell government securities (Bonds)
23
The reserve requirement is the...
Percent of interest rates in each deposit
Percent of deposits banks can loan out
Percent of deficits accumulated over time
Percent of deposits that banks must hold in reserve
24
What is Ms. Ramirez's favorite animal?
Axolotl
Dogs
Rabbit
Chinchilla
25
Targets inflation and is set by a central bank...
Fiscal Policy
Monetary Policy
26
Exporting more than is imported...
Trade Deficit
Saving Deficit
Trade Surplus
Good Deals were made
27
True/False: Credit Cards are considered money.
True
False

Chapter 4 Test 2021 Flashcards | StudBud