Macro Ecnomics for FBU
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| Say's Law is | Was a basic Pillar of classical Economics
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| Which Question did John Maynard Keynes pose for the classical economists | What if savings and investment were not equal?
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| out ecnomy is always tending towards fll employment according to | The classical economists
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| At Equilibrium GDP | Savings= investment and aggregated demand= Aggregate Supply
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| Which statement is true | The classical believed the equilibrium GDP and full employment GDP are equal but Keynes did not
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| Laissez-faire economics was advocated by | the classicals by not by keynes
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| According to the classical economist, if the amount of money people are planning to invest is greater than the amount that people want to save | interest rates will rise and savings will fall
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| which best describes the classical theory of employment | We will occasionally have some unemployment but out economy will automatically move back towards full employment
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| According to the classicals, Our ecnonomy can produce beyond the full employment output | Only in the short run
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| according the Keynes and equilibrium below full employment is | a strong possibilities
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| To fight a depressiong keynes said that the government should | spend alot of money
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| underwhat condidtion will an increase in aggregate demand result in no increase in the price level | The aggregate demand curve intersects the horizontal segment of the aggregate supply curve
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| The price level rises more rapidly as the maximum output level is approached along an aggregate supply curve because | the costs of additional units of aggregate output begin to rise more rapidly causing firms to seek higher prices to cover these rising costs.
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| The classical theory of employment held that | the savings of households would all be borrowed and investmented by businesses
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| The notion that everything the economy produces is purchesed | sums up say's law
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| The classical theory of the loanable funds market concluded that | The interest rate would equate saving and investment and thereby cause say's law to be valid
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| To close a recessionary gap we should | Raise G and lower Taxes
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| Budgets deficits are appropriate during | recessions but not inflation
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| Which statement is true about automatic stabilizers | They have helped smooth out the business cycle
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| if we passed a constitutional amendment requiring a balanced budget every year, this would probably | make out recessions into depressions
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| If equilibrium GDP is 1 trillion greater that full employment GDP and there is an inflationary gap of 250 billion the multiplier is | 4
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| if full employment GDP is 1 trillion greater that equilibrium GDP, and there is a recessionary gap of 400 billion the multiplier is | 2.5
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| . If equilibrium GDP is $500 billion greater than full employment GDP and the multiplier is 2.5, there is an inflationary gap of | 200 Billion
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| If full employment GDP is $500 billion greater than equilibrium GDP and the multiplier is 5, there is a recessionary gap | of 100 billion
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| We have an inflationary gap when | equilibrium GDP is greater than full employment GDP.
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| Which statement is true | Over 50 percent of the outstanding public debt is owed by foreigners.
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| In the 1930s, John Maynard Keynes said that our main economic problem was | Weak aggregate demand
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| If G = $800 billion, tax receipts = $850 billion, and there is an inflationary gap of $100 billion, there is | A budget surplus
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| Which of the following is not money | GOLD
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| Which statement is true A. M1 is larger than M3. B. M2 is about five times the size of M1. C. M3 is three times the size of M2. D. None of the statements are true. | M@ is about five times the size of M1
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| People tend to hold more money as | The price levels rises and credit availability falls
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| Back in the middle ages the only safe place to put your money was | in goldsmiths' safes
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| All large finacial institutions have to hold a reserve of almost ______% of their demand deposits | 10
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| Which one of the following is not part of our money supply | GOLD
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| Which statement is true A. M1 is larger than M2. B. M1 + M2 = M3. C. M2 + large denomination time deposits = M3. D. M1 times M2 = M3 | C.
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| Money is created when someone | takes out a bank loan
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| bank deposit creation is limited by | reserve requirements
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| John Maynard Keynes said that people have three motives for holding money. Each of the following is a Keynesian motive except A. inflation. B. transactions. C. speculative. D. precautionary. | A.
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| The ______ Demand for money is most sensitive to interest rate change | Speculative
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| The moment modern Banking was born was when | A. the number of goldsmiths' receipts exceeded the number of gold coins kept in goldsmiths' safes.
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| Which is true? A. M1 is part of M2, but M2 is not part of M3. B. M1 is not part of M2, but M2 is part of M3. C. M1 is part of M2, and M2 is part of M3. D. None of the choices are true. | C.
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| People tend to hold more money as | The price level rises and interest rates fall
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| The united states did not have a central bank until | 1913
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| When there is great deal of inflation the fed will | Sell securities on the open market
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| Our currency is issued by | the federal reserve
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| Which is not a job of the federal reserve? A. Check clearing B. Issuing currency C. Insuring bank deposits D. Controlling the rate of growth of the money supply | C.
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| Which statement is true? A. Actual reserves – required reserves = excess reserves. B. Required reserves – actual reserves = excess reserves. C. Required reserves + actual reserves = excess reserves. D. None of the statements are true. | A.
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| If you wrote a check for $37.55 to pay your phone bill and sent it to Verizon, | your bank's deposits would go down by $37.55 and its reserves would go down by $37.55.`
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| Which statement is true? A. We have had a central bank since 1789. B. We have never had a central bank. C. Our central bank was formed in 1913. D. We did not have a central bank prior to the Federal Reserve. | c.
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| Prior to October 2008, commercial banks tended to hold relatively small amounts of excess reserves because | The Fed did not pay interest n reserves
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| True or false The president basically makes monetary policy. and The Board of Governors of the Fed serves at the president's pleasure and can be summarily dismissed. | True
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| Required reserves are | equal to total reserves minus excess reserves
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| If the required reserve ratio was lowered | The size of the monetary multiplier would increase
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| The federal open marker committee has ______ members | 12
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| The rate of growth of our money supply is controlled by | the federal reserve
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| During the course of bad recession the fed would probably be doing each of the following except | Selling securities on the open market
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| The federal open market committee is made up of all of the following except | ther president of the US
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| The board of governors of the federal reserve is independent of | both the president and congress
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| Which of the following federal reserve banks is most instrumental in carrying out the policy directive of the board of governors | The federal reserve bank of new york
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| When the fed buys US bonds | . excess reserves in commercial banks are increased immediately.
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| The deposit expansion multiplier is | the reciprocal of the reserve ratio
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