Barter transactions involve the use of money.
The use of money as a medium of exchange represents the mostimportant service that money renders.
Currency includes demand deposits.
The money supply known as M1 includes all assets that are good storesof value.
A primary tool of the Federal Reserve System is open market operations.
Commercial banks and credit unions create money in concert with theFed.
Providing a secure place for savings is not a major function of financialinstitutions.
The Fed's reserve requirement ratio can reduce the monetary base.
bankers want to retain reserves of 25% against all deposits, if the
Fedissues $100 billion in currency, and if private individuals keep all
moneyin banks, then once the banks are fully loaned up, the money supply
willconsist of $400 billion in demand deposits.
Long-run Aggregate Supply Curve that is compatible with the
classicalmacroeconomc model is a vertical line at full employment.
When the federal government spends more than it collects, it must issuemore debt or more monetary base.
Keynesians tend to believe that massive tax cuts and new government spending are cures for recession.
There are currently 13 Federal Reserve Districts.
One of the 3 tools of the Federal Reserve is fiscal policy.
Monetary policy of the Federal Reserve affects the monetary base toachieve its goals of rates of inflation and interest.
The buying of securities in the open market by the Federal Reserve will augment the monetary base of the economy.
selling of securities in the open market by the Federal Reserve
willactually decrease the monetary base by reducing the amount the
bankingsystem will ultimately be able to lend.
Federal Funds Market is actually monitored and manipulated by
theFederal Reserve, but individuals can actually enter the market
andborrow funds if desired.
short-run Phillips curve is a curve that shows the relationship
betweenthe inflation rate and the pure interest rate when the natural
rate ofunemployment rate and the expected inflation rate remain
interest rates are rising, the tendency is for holders of M1 to get
outof M1 and move into M2 and M3 due to the opportunity costs of
The science of macroeconomics:
solved the Great Depression.
did not solve the Great Depression but kept the U.S. economy from suffering.
emerged during the decade of the Great Depression.
did not evolve until after World War II so had no connection to the Great Depression.
The tax cuts passed by Congress in 2002 to help move the economy more rapidly toward potential GDP are an example of:
automatic fiscal policy.
discretionary fiscal policy.
contractionary fiscal policy.
the post World War II period, considerable growth in total production
took place in the U.S. But at the same time, businesses were dumping
their waste into the Great Lakes with minimal cost to themselves,
significantly polluting the bodies of water as a result. This occurrence
is an example where:
real GDP gives an overly positive view of economic welfare.
real GDP gives an overly negative view of economic welfare.
investment would have been a better measure of total production.
the pollution counts as a final good.
A Phillips curve measures the relationship between:
the unemployment rate and inflation.
the level of money wage rates and GDP.
unemployment and GDP.
inflation and GDP.
In order for the United States to repay its international debt, the United States would need to:
have a current account deficit.
have a surplus of imports over exports.
have a surplus of exports over imports.
If the CPI was 122.3 at the end of 2007 and 124.5 at the end of 2008, the inflation rate over these two years was:
A demand-pull inflation initially is characterized by:
increasing real output and a labor shortage.
increasing real output and a labor surplus.
decreasing real output and a labor shortage.
decreasing real output and a labor surplus.
The labor force is the sum of the:
working-age population and the number of unemployed people.
number of employed people and the working-age population.
number of employed people and the number of unemployed people.
total population and the number of unemployed people.
2005, Armenia had a real GDP of approximately $4.21 billion and a
population of 2.98 million. In 2006, real GDP was $4.59 billion and
population was 2.97 million. From 2005 to 2006, Armenia's standard of
did not change
might have increased, decreased, or remained unchanged but more information is needed to determine which.
to real business cycle theory, a fall in the real interest rate
________ current labor supply and ________ current employment.
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