An oil embargo placed on the US by major oil producing nations would likely result in…

Price Level Increase; Real GDP Decrease

When the Fed buys gov't bonds, what effect does this have on the money supply and AD?

Money Supply increases; Aggregate Demand increases

Money acts as a Unit of Account in the market because…

prices indicate the types of goods and services to sale

What would happen if the Federal Reserve decided to increase the reserve requirement in banks?

Money circulating in the economy would decrease.

Changes to the benefits system, so that there was less incentive to work, would most likely:

Shift aggregate supply left so less is supplied

How might monetary policy be used to combat inflation fears?

The Federal Reserve might raise interest rates.

Improved training of employees would:

Shift Aggregate Supply to the Right

Which of these actions of the Federal Reserve can slow economic growth?

The Fed increases the discount rate

Monetary Policy is best described as

Actions by the Fed to expand or contract the money supply

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Unit 3: Macroeconomics Review Part 2

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Questions 22

Answers

1
An oil embargo placed on the US by major oil producing nations would likely result in…
Price Level Decrease; Real GDP Decrease
Price Level Increase; Real GDP Decrease
Price Level Increase; Real GDP Increase
Price Level Decrease; Real GDP Increase
2
When you check how much $ you have in your account to determine what you can afford, this is...
Unit of Account
Store of Value
Medium of Exchange
Savings
3
If the gov't wants to encourage businesses and consumers to spend more money, it would...
Decrease the tax rate.
Increase the reserve requirement
Decrease government spending on goods and services
Increase the tax rate
4
In 2008, US families received a tax check from the IRS. Why were tax rebate checks distributed?
To increase the federal income tax
To decrease consumer spending
To stimulate the economy
To slow down productivity
5
Which is primarily responsible for the money supply?
The Comptroller of the Currency
The United States Treasury
The Federal Reserve System
The Federal Deposit Insurance Corporation
6
Which of these is most likely to occur after the government increases taxes
Annual deficits increase
The national debt increases.
Government programs decrease
Consumer spending decreases.
7
When the Fed buys gov't bonds, what effect does this have on the money supply and AD?
Money Supply decreases; Aggregate Demand increases
Money Supply increases; Aggregate Demand increases
Money Supply increases; Aggregate Demand decreases
Money Supply increases; Aggregate Demand decreases
8
Money acts as a Unit of Account in the market because…
prices can determine dividends for businesses
high prices for goods and services signal a healthy economy
prices indicate the types of goods and services to sale
entrepreneurs become motivated as prices rise
9
Which action is consistent with a contractionary fiscal policy?
Reduce Taxes
Reduce Spending
Increase the Reserve Requirement
Decrease the Discount Rate
10
Which of these does not describe a basic function of money?
A store of value
A medium of Exchange
A traded item
A unit of Account
11
What would happen if the Federal Reserve decided to increase the reserve requirement in banks?
Money circulating in the economy would decrease.
The amount of federal taxes people owe would decrease.
The amount of federal taxes people owe would increase.
Money circulating in the economy would increase.
12
Changes to the benefits system, so that there was less incentive to work, would most likely:
Shift aggregate demand left so less is demanded
Shift aggregate supply left so less is supplied
Shift aggregate demand right so more is supplied
Shift aggregate demand right so more is demanded
13
The process by which the gov't manages spending and taxes to influence the economy is...
Fiscal Policy
Trade Policy
Tax Policy
Monetary Policy
14
The Federal Reserve conducts its business directly with…
Stock markets and bond markets
Individuals and firms
The government and banks
Product markets and factor markets
15
Aggregate Demand will increase if…
Consumption Falls
Imports Fall
Investment Falls
Exports Fall
16
When you put money into a savings account which function of money is it acting as?
Medium of Exchange
Unit of Account
Investment
Store of Value
17
How might monetary policy be used to combat inflation fears?
The Federal Reserve might lower interest rates.
The Federal Reserve might raise interest rates.
The Federal Reserve might raise taxes.
The Federal Reserve might lower taxes.
18
Improved training of employees would:
Shift Aggregate Demand to the Left
Shift Aggregate Supply to the Left
Shift Aggregate Demand to the Right
Shift Aggregate Supply to the Right
19
Which of these actions of the Federal Reserve can slow economic growth?
The Fed buys bonds, which gives people more money to spend
The Fed regulates the amount of money supply
The Fed increases the discount rate
The Fed decreases the reserve requirement
20
The economy is has a negative GDP growth rate, which fiscal policy action should the gov't use?
Increase Spending
Decrease Interest Rates
Raise Taxes
Increase the Reserve Requirement
21
Which of these correctly completes the chart above?
Federal Open Market Committee
Federal Reserve Chairman
President of the United States
Senate and House of Representatives
22
Monetary Policy is best described as
Benefits received by employees
Actions by the gov't to influence the economy
Actions by the Fed to expand or contract the money supply
A system that relies on supply and demand

Unit 3: Macroeconomics Review Part 2 Flashcards | StudBud