Econ Unit 6 Review

Question 1

The interest rate a bank charges to their best customers is called the...

Accepted Answer

Prime rate

Question 2

Federal reserve notes are distributed by the Fed to district banks, then to depository institutions, and finally to...

Accepted Answer

Individuals and businesses

Question 3

The official paper currency of the United States is called a

Accepted Answer

Federal reserve note

Question 4

The Fed is different from most countries&#x27; central banks because it has

Accepted Answer

both a national and regional structure

Question 5

Paper money and coins are called...

Accepted Answer

Currency

Question 6

In general, which group would most likely favor a supply-side economic policy?

Accepted Answer

Conservative Republicans

Question 7

The use of government revenue and spending to stabilize the economy by stimulating aggregate supply is...

Accepted Answer

supply-side fiscal policy

Question 8

The interest that the Fed charges when it lends money to other banks is the...

Accepted Answer

Discount rate

Question 9

The fraction of a bank&#x27;s deposits that must be kept in reserve so that it can loan out money is the...

Accepted Answer

Required Reserve Ratio

Question 10

Whose economic theory did Keynesian economics work to counteract?

Accepted Answer

Adam Smith

Question 11

A nation&#x27;s main monetary authority is called the...

Accepted Answer

Federal Open Market Committee (FOMC)

Question 12

If the government wants to slow down the economy, what should it do?

Accepted Answer

double the excise tax on sales of gasoline

Question 13

What are the two basic tools that the federal government used to influence the economy?

Accepted Answer

Taxation and spending

Question 14

A plan to increase the amount of money in circulation is...

Accepted Answer

Easy/loose monetary policy

Question 15

Why was Keynes&#x27; theory described as revolutionary?

Accepted Answer

It rejected the traditional views of macroeconomics held at the time

Question 16

Contractionary monetary policy is sometimes called

Accepted Answer

Tight-money policy

Question 17

Which of the following statements is true?

Accepted Answer

Neoclassical economists see the government as an economic gardener

Question 18

The Federal Reserve System board that supervises the sale and purchase of bonds is called the...

Accepted Answer

Federal Open Market Committee (FOMC)

Question 19

Expansionary monetary policy is sometimes called

Accepted Answer

Easy-money policy

Question 20

The monetary policy tool used most by the Feds to adjust monetary supply is called...

Accepted Answer

Open Market operations

Question 21

Which Federal Reserve district does Cincinnati fall under?

Accepted Answer

Federal Reserve of Cleveland

Question 22

The fiscal goal of smoothing out the peaks and troughs of a business cycle is known as...

Accepted Answer

countercyclical

Question 23

What political issue sometimes interferes with demand-side fiscal policy

Accepted Answer

Funding popular projects even if the economy requires decreased spending

Question 24

Changing the required reserve ratio from 10% to 5%

Accepted Answer

expands the money supply

Question 25

How did the Great Depression affect the thinking of Keynes and other economists?

Accepted Answer

It caused them to favor government intervention in the economy

Question 26

A business is hiring more workers because of expected tax cuts is an example of...

Accepted Answer

rational expectations theory

Question 27

Which action is an example of demand-side fiscal policy?

Accepted Answer

Increased government spending

Question 28

Expansionary fiscal policy is likely to

Accepted Answer

lower interest rates

Question 29

Which action is an example of supply-side fiscal policy?

Accepted Answer

Decreased corporate tax rates

Question 30

The use of government revenue and spending to stabilize the economy by influencing aggregate demand is...

Accepted Answer

demand-side fiscal policy

Question 31

What term is used for a government plan to reduce aggregate demand and slow the economy?

Accepted Answer

contractionary fiscal policy

Question 32

Ronald Reagan was a supporter of which macroeconomic theory?

Accepted Answer

Supply-side Economic Theory

Question 33

Banks borrow more money from the Fed when the...

Accepted Answer

discount rate decreases

Question 34

The Fed implements a contractionary monetary policy by

Accepted Answer

selling bonds on the open market

Question 35

The interest at which a bank lends available funds to another bank is the...

Accepted Answer

Discount rate, Federal funds rate

Question 36

Why would the Fed sell bonds in the open market and increase the discount rate?

Accepted Answer

to influence the Federal Funds Rate to increase

Question 37

The Fed will buy bonds, decrease the reserve requirement, and decrease the discount rate when...

Accepted Answer

unemployment is high

Question 38

A plan to reduce the amount of money in circulation is called...

Accepted Answer

Tight monetary policy

Question 39

Check clearing is becoming a less important function of hte Fed because...

Accepted Answer

electronic-payment methods are becoming more popular

Question 40

If the government wants to expand the economy, what should it do?

Accepted Answer

Begin construction of a new dam

Econ Unit 6 Review

Questions 40

Econ Unit 6 Review

Questions 40