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In: Economics

Q. 1 The monetary base is the sum of A. U.S Treasury notes and other government...

Q. 1 The monetary base is the sum of

A. U.S Treasury notes and other government securities

B. currency and checkable deposits at depository institutions

C. foreign and domestic deposits at the Fed

D. currency and reserves of depository institutions

Q.2____________ of unemployment during _______________make it easier for workers to _____________wages

A. Low levels; an expansion; negotiate higher

B. Low levels; a recession; accept lower

C. High levels; an expansion; accept lower

D. High levels; a recession; negotiate higher

Q.3 How does an open market operation change the monetary base>

A. increases the quantity of currency, which increases; decreases the quantity of currency, which decreases

B. increases; has no effect on

C. increases; decreases

D. decreases; increases

Q.4 The sale of government securities by the Fed leads to

A. a decrease in bank reserves

B. a contraction in bank lending

C. a decrease in the monetary base

D. All of the above answers are correct

Q.5 The required reserve ratio

A. increases when withdrawals from a bank are made

B. is the amount of money that banks require borrowers to reserve in their account

C. is higher for banks that make riskier loans

D. is the fraction of a bank's total deposits that is required to be held in reserves

Q.5 The gap between ________ is the output gap.When ________, the output gap is called an inflationary gap.

A. real GDP and potential GDP; real GDP exceeds potential GDP

B. the interest rate and the price levels; real GDP exceeds potential GDP

C. the price level and the cost; real GDP equals the interest rate

D. real GDP and aggregate demand; real GDP equals potential GDP

Q.6 By itself, a supply shock such as an increase in the price of oil, will

A. cause real GDP to permanently decrease year after year

B. be inflationary as long as there is no policy response

C. not cause inflation if there is no policy response

D. cause a wage- price spiral

Solutions

Expert Solution

Q. 1 The monetary base is the sum of ?

Answer- D. currency and reserves of depository institutions

Q.2____________ of unemployment during _______________make it easier for workers to _____________wages

Answer- A. Low levels; an expansion; negotiate higher.

Q.3 How does an open market operation change the monetary base>

Answer A. increases the quantity of currency, which increases; decreases the quantity of currency, which decreases .

Q.4 The sale of government securities by the Fed leads to

Answer- D. All of the above answers are correct.

Q.5 The required reserve ratio

Answer- D. is the fraction of a bank's total deposits that is required to be held in reserves.

Q.5 The gap between ________ is the output gap.When ________, the output gap is called an inflationary gap.

Answer- A. real GDP and potential GDP; real GDP exceeds potential GDP.

Q.6 By itself, a supply shock such as an increase in the price of oil, will

Answer- B. be inflationary as long as there is no policy response .

Rahul Sunny answered 8 months ago
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