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1. Define the following : a.Today's money or Token Money b.Expansionary or Easy money policy c.Discount Rate d.Debt 2. Give short answers : a.What good

1.Define the following:

a.Today's money or Token Money

b.Expansionary or Easy money policy

c.Discount Rate

d.Debt

2.Give short answers:

a.What good properties or qualities does today's money have that Barter did not?

b.What are the two tools governments use in their fiscal policy decisions?

c.required reserves and excess reserves

d.We are in Covid-19Crisis. 20 million people have lost jobs. If the Government hires you as a fiscal policy consultant, what two policy things or ideas would you suggest the Government should do, based on what you have studied in this course?

3.TRUE AND FALSE (write True or False against each answer. Do not use T or F)

a.Discretionary spending is spending on mandated items

b.Barter trade has double coincidence of wants.

c.Today's monetary system is fiduciary in nature.Commodity money is where face value and intrinsic value are equal

e.When Fed raises the discount rate, the excess reserves of the bank increase

f.Discount loans are monies borrowed by the banks directly from the FED

g.An easy money policy is designed to promote economic growth and ensure full employment and price stability.

h.The M1 money supply consists of currency, checks, savings accounts, and credit cards

i.During expansionary fiscal policy, the Government should raise taxes

j.OMOS involves only buying securities by the FED

k.Interest payments on money borrowed, social security payments, Medicare benefits are examples of discretionary spending.

4.MULTIPLE CHOICE

a.The interest the Fed charges on loans it makes to banks directly is called

i.The reserve ratio

ii.The prime rate

iii.The federal funds rate

iv.The discount rate

b.The official fiscal policy of the government is contained in:

i.The memo to the consumers

ii.The annual budget

iii.Supreme Court

iv.In a political blog

c.Barter is insufficient as a form of money because

i.The means of payment it uses is in unlimited supply

ii.It requires a double coincidence of wants

iii.Society can find no generally accepted form of money

iv.It uses the consistent method of quoting prices

d.Banks borrowing from the FED Reserve leads to:

i.No change in bank reserves

ii.A decrease in bank loans

iii.A decrease in money supply

iv.An increase in money supply

e.Which of the following is an example of FIAT money

i.Cigarettes

ii.An ounce of gold

iii.A one hundred dollar bill

iv.A government bond

f.Which of the following is considered tight money or contractionary money policy?

i.Decrease in the required reserve ratio

ii.Decrease in the federal funds rate

iii.Decrease in the discount rate

iv.Selling of securities by the FED in OMOs

g.Gresham's law states that:

i.Supply creates its own demand

ii.Bad money drives good money out

iii.Good money drives bad money out

iv.Demand creates its own supply

h.During a Covid Crisis, the Government should:

i.Raise taxes

ii.Lower spending on public goods and services

iii.Only lower taxes

iv.Lower taxes and spend more on public goods and services

i.During the current Covid Crisis, the FED has so far:

i.Lower interest rates, including Dr, FFR, RRR

ii.Bought municipal, state, and federal bonds, T-bills, and Notes

iii.All of the above

iv.None of the above

j.If the Fed wants to increase the money supply and promote economic growth:

i.It reduces the number of reserves with the banks

ii.Creates more excess reserves

iii.Makes it difficult for banks to creat additional deposits

iv.Raises the required reserve ratio

5.Match Column A and Column B by filling in with your ownappropriate words:

COLUMN A

COLUMN B

Today's monetary system is called

Open Market Operations refers to

M1 version of money includes

When Money functions as a unit of Account

Fiscal Policy deals with two tools. They are

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