Macro Policy MCQs

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Discretionary fiscal policy refers to:






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Expansionary fiscal policy is so named because it:






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Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into ch...






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The purchase of government securities from the public by the Fed will cause






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Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?






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The asset demand for money






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An increase in nominal GDP increases the demand for money because






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The opportunity cost of holding money






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Which of the following statements is correct?






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The securities held as assets by the Federal Reserve Banks consist mainly of






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Which of the following is a tool of monetary policy?






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In the United States, monetary policy is the responsibility of the






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If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by






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If the MPC in an economy is 0.8, government could shift the aggregate demand curve rightward by $100 billion by






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Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output grow...






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In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 bi...






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An appropriate fiscal policy for a severe recession is






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Which of the following represents the most expansionary fiscal policy?






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Which of the following represents the most contractionary fiscal policy?






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An expansionary fiscal policy is shown as a






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Suppose the price level is fixed, the MPC is 0.5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government ...






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Suppose the price level is fixed, the MPC is 0.8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly), government ...






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Which of the following best describes the built-in stabilizers as they function in the United States?






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The amount by which government expenditures exceed revenues during a particular year is the






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Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns down...






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The crowding-out effect of expansionary fiscal policy suggests that






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Money functions as






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If you write a check on a bank to purchase a used Ford Fiesta, you are using money primarily as






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If you place a part of your summer earnings in a savings account, you are using money primarily as a






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In the United States, the money supply (M1) includes






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Currency held in the vault of First National Bank is






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Currency in circulation is part of






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The difference between M1 and M2 is that






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As it relates to Federal Reserve activities, the acronym FOMC describes the






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In the U.S. economy, the money supply is controlled by the






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The members of the Federal Reserve Board






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In a fractional reserve banking system,






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The reserves of a commercial bank consist of






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The primary purpose of the legal reserve requirement is to






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Excess reserves refer to the






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Suppose the reserve requirement is 10 percent. If a bank has $5 million of checkable deposits and actual reserves of $500,000, the bank






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A reserve requirement of 20 percent means a bank must have at least $1,000 of reserves if its checkable deposits are






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Assume Company X deposits $100,000 in cash in commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is...






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A bank temporarily short of required reserves may be able to remedy this situation by






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The multiple by which the commercial banking system can expand the supply of money is equal to the reciprocal of






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Other things equal, if the required reserve ratio was lowered,






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If a portion of the loans extended by commercial banks is taken as cash rather than as checkable deposits, the maximum money-creating potential of the...






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If the monetary authorities want to reduce the monetary multiplier, they should






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In essence, which of the following groups "creates" money?






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When bankers hold excess reserves,






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Which of the following statements is true?






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To increase the federal funds rate, the Fed historically has






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Which of the following best describes the cause-effect chain of an expansionary monetary policy?






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A contraction of the money supply






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Which of the following actions by the Fed would cause the money supply to increase?






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Which of the following best describes the cause-effect chain of a restrictive monetary policy?






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The sale of government bonds by the Federal Reserve Banks to commercial banks will






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Assume that the required reserve ratio is 25 percent. If the Federal Reserve sells $120 million in government securities to the general public, the mo...






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An increase in the money supply, ceteris paribus, usually






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What is one of the advantages of monetary policy over fiscal policy?






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The basic equation of monetarism is






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According to monetarists,






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Which of the following is a tenet of supply-side economics?






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Supply-side economist Arthur Laffer has argued that






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A basic criticism of supply-side economics is that






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The Laffer Curve is a central concept in