QUESTION 6 In a system of 100-percent-reserve banking, changes in the money supp
ID: 1125381 • Letter: Q
Question
QUESTION 6
In a system of 100-percent-reserve banking, changes in the money supply depend on the decisions of the Fed as well as the behavior of depositors and bankers.
True
False
10 points
QUESTION 7
"Leaning against the wind" is exemplified by a(n)
increase in the money supply when there is a recession.
All of the above are correct.
tax increase when there is a recession.
decrease in government expenditures when there is a recession.
10 points
QUESTION 8
According to the IGM poll, most economists think that the benefits of ARRA exceeded the costs.
True
False
10 points
QUESTION 9
GDP and GNP are identical when
exports and imports exactly balance.
there are no taxes.
all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers.
production by domestic producers in other countries is greater than production by foreign producers domestically.
10 points
QUESTION 10
Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would
stay the same.
decrease by the same amount as the increase in aggregate demand.
decrease.
increase.
10 points
QUESTION 11
If real income per person was $47,210 in the U.S. in 2010, and $55,860 in 2014, what was the annual growth rate over this time period?
1.83 percent per year
4.29 percent per year
1.18 percent per year
8.45 percent per year
a.increase in the money supply when there is a recession.
b.All of the above are correct.
c.tax increase when there is a recession.
d.decrease in government expenditures when there is a recession.
Explanation / Answer
6) FATSE. It depends on the behavior of depositors and bankers.fed does not control the amount of money that households choose to hold as deposits in banks.
7) d) decrease in government expenditures when there is a recession.
"Leaning against the wind" is exemplified by a Decrease in the money supply when there is an expansion so (a) is not true. Policymakers following a "lean against the wind" policy would Increase government expenditures when output is low and decrease them when output is high.
8) TRUE.
9) c) all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers.
10) d) increases.
An increase in aggregate demand is beneficial in the short run because unemployment rate falls but but harmful in the long run because price level rises.
11) b) 4.29% per year.
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