1. Which of the following policies was listed as an automatic stabilizer?
a. The stimulus package.
b. The bank bailout.
c. The road construction bill.
d. The income tax.
e. None of the above.
2. If the Federal Reserve wished to raise interest rates which of the following policies would work?
a. They could buy bonds.
b. They could lower the discount rate.
c. They could raise the reserve requirement.
d. All of the above would work.
e. None of the above would work.
3. With a reserve requirement of 4% how much money would be created if the government printed $100 and gave it to banks and the banks loaned it as normal?
a. $100
b. $1000
c. $2000
d. $2500
e. There is not enough information to answer this question.
4. Which of the following would be an expansionary fiscal policy?
a. Printing money.
b. Raising taxes.
c. Balancing the budget.
d. liminating unemployment insurance.
e. Building a giant pyramid in Kansas.
5. Which of the following will be associated with an increase in the money supply in the money market?
a. Money demand will decrease.
b. Money demand will increase.
c. Bond prices will decrease.
d. Interest rates will decrease.
e. Both c and d are correct.
6. Which of the following would be a change in monetary policy?
a. The Federal Reserve selling bonds.
b. The President bailing out the banks.
c. Congress increasing the minimum wage.
d. Businesses paying their employees more.
e. None of the above.
7. Which of the following was NOT a function of money listed in class?
a. Money creates the double coincidence of wants.
b. Money is a medium of exchange.
c. Money is a unit of account.
d. Money is a store of value.
e. All of the above are functions listed in class.
8. Which of the following is true with respect to the classical view when talking about the quantity theory of money?
a. This theory leads to the creation of the Laffer curve.
b. The equation of exchange will lead to the crowding out effect.
c. An increase in the quantity of money will only cause inflation.
d. Some money will be held for speculative reasons.
e. The classical theory of money argues that only gold is of any real value.
9. Which of the following was listed as a school of thought on monetary policy?
a. The Clerical school.
b. The Kenyian school.
c. The Monetarist school.
d. None of the above was listed as schools of thought on monetary policy.
e. only a and b were listed as schools of thought on monetary policy.
10. If the government spends more than it takes in as taxes in a year economists call this
a. A trade imbalance.
b. A surplus.
c. The debt.
d. A deficit.
e. Both c and d.