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Question 70

Which of the following would cause the change depicted below?

An increase in household wealth.

Fears of a looming recession.

Contractionary fiscal policy.

The Fed selling T-Bills.

Question 75

Which of the following statements regarding the market for loanable funds is true?

The interest rate measures the opportunity cost of investing.

Equilibrium occurs by matching up desired savings with desired investment spending.

It analyzes the supply and demand of loanable funds.

All of the following statements are true.

Question 84

Your local Chase Bank has $1 million in checkable deposits, $2 million in deposits with the Federal Reserve, and $3 million cash in the bank vault. If the minimum reserve ratio is 10%, how much is the bank required to keep in reserves?

$.1 Million

$.2 Million

$.3 Million

$.6 Million

Question 86

Which of the following statements best describes GDP per capita?

GDP per capita is GDP divided by labor force.

GDP per capita is GDP divided by population.

GDP per capita tells us the welfare of people in an economy.

GDP per capita is the only metric that should be used to describe Gross Domestic Product.

Question 88

True or False. Automatic stabilizers are spending and taxation rules that are automatically expansionary when the economy contracts and automatically contractionary when the economy expands, limiting the size of an output gap.

True.

False.

Question 89

Which of the following is not a purpose for the financial system?

Reducing transaction costs.

Providing liquidity.

Reducing financial risk.

All of the following are purposes for the financial system.

Question 95

Which of the following fiscal policies would resolve the current gap?

A cut in taxes.

An increase in government purchases.

A reduction of government transfers.

None of these are a form of fiscal policy.

Question 98

You take out a loan at 5% interest when the bank expect inflation to be 3%. Inflation was actually 5%. Who is the winner and loser in this scenario?

You are the winner, while the bank is the loser.

You are the loser, while the bank is the loser.

You and the bank are both winners.

You and the bank are both losers.

Question 99

Identify the cost of inflation described. Inflation is 10% and people no longer want to hold on to cash because it keeps losing value.

Shoe-leather cost.

Menu cost.

Unit-of-account cost.

This is not a cost of inflation.