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

Federal Reserve and Monetary Policy: Functions, Tools and Economic Impact

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Economics - Macroeconomics

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Cards in this deck(62)

In which time frame does monetary policy primarily affect employment?

To decrease the money supply, which of the following actions could the Federal Reserve take?

Who was appointed chairman of the Board of Governors in 2005 by President George W. Bush?

Economists use the term 'money' to refer to which of the following?

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?

An increase in the money supply might indicate that the Federal Reserve has done what?

What happens when the Federal Reserve buys government bonds?

An item that people can use to transfer purchasing power from the present to the future is called what?

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?

Which of the following is NOT a function of the Federal Reserve?

An assistant manager at a restaurant gets a $100 a month raise but finds he cannot buy as many services as last year. What has happened to his salary?

Suppose that when the money supply changes, real output and velocity do not change. What happens when there is a 2 percent increase in the money supply?

As the price level rises, what happens to the value of money?

Given a nominal interest rate of 6 percent, in which of the following cases would you earn the lowest after-tax real rate?

What does the term 'menu cost' refer to in economics?

How can people reduce the inflation tax?

As the price level decreases, what happens to the value of money?

Refer to Figure 30-2. If the relevant money-demand curve is labeled MD1, what is the equilibrium?

If the price index in some country were falling over time, what would economists say that country had?

Refer to figure 30-3. What quantity is measured along the vertical axis?

Who determines the supply of money?

Suppose that when the money supply changes, real output and velocity do not change. What happens when there is a 2 percent increase in the money supply?

Refer to Figure 30-3. If the relevant money supply curve is labeled MS1, what is the equilibrium price level?

Which of the following combinations of the real interest rate and the inflation rate implies a nominal interest rate of 7 percent?

In order to maintain stable prices, what must a central bank do?

A decrease in the money supply creates an excess of what?

Open-market purchases by the Fed make the money supply do what?

Given a nominal interest rate of 5 percent, in which of the following cases would you earn the highest after-tax real rate?

Wealth is redistributed from debtors to creditors when inflation was expected to be what?

Which of the following equations is correct?

Which of the following is an example of U.S. foreign portfolio investment?

What does net capital outflow measure?

If a country has a trade deficit, what does it imply?

You are planning a graduation trip to Nepal. Other things the same, if the dollar appreciates relative to the Nepal Rupee, what happens?

Foreign-produced goods and services that are sold domestically are called what?

Which of the following both raise net exports?

The country of Freedonia has a GDP of $2100, consumption of $1200, and government purchases of $400. What does this imply?

In an open economy, gross domestic product (Y) equals $2,450 billion, consumption expenditure (C) equals $1,390 billion, government expenditure (G) equals $325 billion, investment (I) equals $510 billion, and net exports (NX) equals $225 billion. What is national savings (S)?

What does the law of one price state?

The value of Peru's exports minus the value of Peru's imports is called what?

Which type(s) of economies interact with other economies?

If the exchange rate were 0.5 Canadian dollars per U.S. dollar, how much would a watch that costs $8 U.S. dollars cost in Canadian dollars?

An appreciation of the U.S. real exchange rate induces U.S. consumers to buy what?

What is the significance of supply in relation to increase and following?

What is the nominal exchange rate?

Sonya, a citizen of Denmark, produces boots and shoes that she sells to department stores in the United States. Other things the same, these sales have what effect?

You are staying in London over the summer and you have a number of dollars with you. If the dollar depreciates relative to the British pound, what happens?

What is the effect of international trade on the standard of living?

Refer to Figure 32-3. At an interest rate of 3 percent, what does the diagram indicate?

Other things the same, if the U.S. exchange rate depreciates, what happens to U.S. net exports?

In the open economy macroeconomic model, what is the key determinant of net capital outflow?

In the open economy macroeconomic model, if investment demand increases, what happens to the supply of dollars in the market for foreign-currency exchange?

Which of the following would both make a country's real exchange rate rise?

What is the effect of trade policies on a country's overall trade balance?

Other things the same, people of the U.S. would want to save more if what happens to the real interest rate in the U.S.?

What does the open economy macroeconomic model examine the determination of?

Refer to Figure 32-1. In the figure shown, if the real interest rate is 6 percent, what is the quantity of loanable funds demanded?

U.S. corporations Well's Petroleum borrows money to build an oil well in Texas and to build another in Venezuela. Borrowing for which well is included in the demand for loanable funds in the U.S.?

When the yen gets 'stronger' relative to the dollar, what happens to the U.S. trade deficit with Japan?

When Claudia, a U.S. citizen, purchases a handbag made in France, how is the purchase classified?

If purchasing power parity holds, then what is the value of the net exchange rate?

If the exchange rate is 125 yen = $1, how much does a bottle of rice wine that costs 2,500 yen cost in dollars?

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