Economists use the term 'money' to refer to which of the following? Physical currency only Any asset that can be converted into cash Those types of wealth that are regularly accepted by sellers in exchange for goods and services Digital currencies like Bitcoin

Those types of wealth that are regularly accepted by sellers in exchange for goods and services

If the federal funds rate is above the target level set by the Federal Reserve, what action could the Reserve take to move the rate back? Increase the discount rate Decrease the reserve requirement Buy bonds, which would increase the money supply Sell bonds, which would decrease the money supply

Buy bonds, which would increase the money supply

An increase in the money supply might indicate that the Federal Reserve has done what? Decreased the reserve requirement Increased the discount rate Sold bonds to increase the federal funds rate Purchased bonds in an attempt to reduce the federal funds rate

Purchased bonds in an attempt to reduce the federal funds rate

What happens when the Federal Reserve buys government bonds? The money supply decreases and the federal funds rate increases The federal funds rate remains unchanged The money supply increases and the federal funds rate decreases The money supply remains unchanged

The money supply increases and the federal funds rate decreases

If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits, what happens to bank reserves and the money supply when $65 million of bonds are sold to the public? Decrease by $65 million and the money supply eventually decreases by $433.33 million Decrease by $65 million and the money supply remains unchanged Remain unchanged Increase by $65 million and the money supply eventually increases by $433.33 million

Decrease by $65 million and the money supply eventually decreases by $433.33 million

Which of the following is NOT a function of the Federal Reserve? It acts as a lender of last resort It makes loans to large business firms It regulates banks It conducts monetary policy

It makes loans to large business firms

When should an expansionary policy be used in relation to the Long-Run Aggregate Supply (LRAS) curve? When inflation is too high When the economy is overheating When the LRAS line moves right, indicating growth or expansion When the LRAS line moves left, indicating a recession

When the LRAS line moves right, indicating growth or expansion

When is it appropriate to use a recessionary policy concerning the LRAS curve? When unemployment is low When inflation is stable When the LRAS line moves to the right, indicating growth When the LRAS line moves to the left, indicating a recession

When the LRAS line moves to the left, indicating a recession

Why would a government implement an expansionary policy? To reduce inflation To decrease government spending To increase interest rates To encourage economic growth and normalize the economy

To encourage economic growth and normalize the economy

Why might a recessionary policy be used, and what are its intended effects? To increase inflation To encourage demand and spur economic activity To reduce government debt To lower interest rates

To encourage demand and spur economic activity

How can expansionary policy be implemented through fiscal and monetary measures? Raising interest rates and selling government bonds Increasing taxes and reducing government spending Tax cuts and increased government spending; lowering interest rates Reducing money supply and increasing reserve requirements

Tax cuts and increased government spending; lowering interest rates

What are the fiscal measures used in a recessionary policy? Decrease taxes and increase government spending Lower interest rates and increase reserve requirements Sell government bonds and reduce money supply Increase taxes and decrease government spending

Decrease taxes and increase government spending

What is the outcome of implementing both expansionary and recessionary policies on the LRAS line? Both policies increase inflation Both policies decrease unemployment Both policies reduce government debt Both policies make the LRAS line return to normal

Both policies make the LRAS line return to normal

What are some challenges associated with fiscal policy? Poor information, budget deficits, supply-side controversy, crowding out, lags Excessive government control, high taxes, low interest rates High inflation, low unemployment, stable currency Rapid economic growth, increased exports, balanced budget

Poor information, budget deficits, supply-side controversy, crowding out, lags

What are 'lags' in the context of fiscal policy? Rapid economic adjustments Instantaneous market reactions Delays in the implementation and effects of policy measures Immediate effects of policy changes

Delays in the implementation and effects of policy measures

What does 'crowding out' mean in relation to fiscal policy? Government borrowing decreases, leading to lower interest rates Government spending leads to higher interest rates, reducing private investment Private investment increases due to lower interest rates Government spending decreases, leading to increased private investment

Government spending leads to higher interest rates, reducing private investment

What is the proper order for the business cycle? _____ peak, recession, trough, expansion recession, trough, expansion, peak expansion, peak, recession, trough trough, expansion, peak, recession

peak, recession, trough, expansion

Which of the following is an example of monetary policy? _____ changing tax rates both changing government spending and tax rates changing government spending changing the level of interest rates in the economy

changing the level of interest rates in the economy

Consumer Price Inflation in the United States from 1800-2000 _____ has been largely unaffected by macroeconomic policies was on average close to zero for the majority of the period was roughly steady was at its highest levels during the Great Depression

was on average close to zero for the majority of the period

The unemployment rate is best described as the proportion of the nation's population that _____ wants a job, but can't find one wants to work does not have a job is employed

wants a job, but can't find one

Gross domestic product is the total _____ produced within a country in a given time period. quantity of resources used number of goods produced market value of all final goods and services amount of money spent

market value of all final goods and services

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