n) 41) Money functions as a(n) A) medium of exchange. C) unit of account. ) stor

Question

n) 41) Money functions as a(n) A) medium of exchange. C) unit of account. ) store of value. all of the above. 42) . 42) With fractional reserve banking A) banks can act as securities brokers. B) banks retain only a portion of their deposits in their vaults or at Federal Reserve banks C) banks can not generate profits. D) monetary policy will be ineffective. 43) 43) Net public debt is A) all public debt minus all money owed on the federal income tax. B) all federal public debt irrespective of who owns it. C) all public debt plus all government interagency borrowing. D) gross public debt minus all government interagency borrowing. 44) . 44) Contractionary fiscal policy will most likely A) involve cutting taxes. C) reduce the price level. B) raise real GDP. D) involve increasing government spending. 45) 45) Given a required reserve ratio of 20 percent, a commercial bank that has received a new deposit of $100 can make additional loans of $80. C) $400 D) so A) $20. 46) 46, which of the following fiscal policy actions would be appropriate if the economy is experiencing an inflationary gap? A) an increase in government spending C) an increase in the money supply B) an increase in taxes D) a decrease in interest rates 47) 47) Other things being equal, what is the effect of deficit spending on interest rates? A) There is no impact unless the Federal Reserve decides to alter the money supply. B) Interest rates hold constant because the demand for credit decreases. C) Interest rates decline. D) Interest rates rise 48) 48) Which of the following is a factor influencing the demand for money? A) asset demand C) precautionary demand B) transactions demand D) All of the above are correct.

Explanation / Answer

41. The right answer is answer D) All of the above.

Explanation: Money has four functions, which are:

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