True or false

26, If the inflation rate is below the comfort zone or expected to move below it, the Fed considers raising the federal funds rate target.

27, The Fed uses open market operations to make the quantity of money reserves supplied equal to the quantity of money demanded at the target rate.

28, Congress plays an important role in making monetary policy decisions. The president's primary role is limited to appointing the members and chairman of the Board of Governors.

29, By keeping the growth rate of the money supply in line with the growth rate of potential GDP, it is hoped that the Fed can help maintain full employment and keep the price level stable.

30, If the inflation rate is above the comfort zone or expected to move above it, the Fed considers lowering the federal funds rate target.

31, Trade restrictions discriminate against foreign producers and benefit economic progress.

32, A common market is a group of countries that have few or no trade restrictions among themselves.

33, Each country should specialize in producing the good or service with the highest accounting profit.

34, Each country specializes in the production of goods with the lowest opportunity cost.

35, When we refer to the production possibility frontier curves in international trade, they reflect different slopes for different countries because the opportunity cost of production differs between countries.

36, The deliberate management of taxes and government spending by Congress to alter real GDP, employment, control inflation and stimulate economic growth is known as:

37, If cash and check deposits do not have intrinsic characteristics and are not backed by gold and precious metals, then they are money because

• are accepted in exchange for goods and services
• the government says they are money
• they have acceptability, they are legal tender and because of their relative abundance
• they have acceptability, they are legal tender and because of their relative scarcity

38, Which of the following results can be attributed to sound fiscal policy?

• higher price levels
• higher unemployment
• more jobs
• higher budget deficit

39, The equilibrium interest rate is determined by ________________________________.

• the aggregate demand of the economy, and occurs when people are willing to hold the exact amount of money offered by the monetary authorities
• the aggregate supply of the economy, and occurs when people are willing to hold the exact amount of money offered by the monetary authorities
• the aggregate demand and supply of the economy, and occurs when people are willing to hold the exact amount of money offered by the monetary authorities
• the aggregate demand and supply of the economy, and occurs when people are willing to hold the exact amount of money offered by the monetary authorities.

40, The government's responsibility for the stabilization of the value of the monetary unit involves

• the implementation of appropriate fiscal policies and effective control over monetary demand
• the implementation of appropriate fiscal policies and effective control over the money supply
• effective control over money supply and demand
• the application of appropriate fiscal policies

41, Which of the following scenarios will increase the consumption function?

• Expectations of shortages of essential foodstuffs
• High current indebtedness
• Low wealth
• Expectations of deflation

42, The Federal Reserve ________________________.

• determines the money supply
• is the bank of banks
• supervises the banks
• is the bank of banks and supervises banks

43, Automatic stabilizers level economic activity by ____________________.

• have control over inflation
• the government can change them at will
• the spending multiplier doubles
• they increase government expenditures during a recession and reduce government expenditures during inflation

44, To stimulate the economy, the Federal Reserve should ________________________.

• increase government spending
• reduce taxes
• increase legal reserves
• reduce the discount rate

45, Which of the following measures will stimulate economic activity?

• reductions in tax rates
• higher interest rates
• increases in transfer payments
• increases in government spending on goods and services

46, An increase in consumer spending _____________________________________.

will increase aggregate supply and decrease the price level

will decrease aggregate demand and decrease the price level

neither the price level nor gross domestic product will change.

gross domestic product and the price level will increase

47, A fiscal policy aimed at reducing economic activity to counter inflation is known as a policy _________________.

non-discretionary

expansionary

contractionary

stagnation

48, A decrease in the productivity of production inputs ____________________.

will decrease aggregate supply

increase aggregate demand

increase aggregate supply

decrease aggregate demand

49, Underwriting financial securities means that ____________________.

companies print their name on the stock

the investment bank acquires the entire bond or stock issue

the corporation registers on the auction market for financial securities

50, The sum of the marginal propensity to consume and the marginal propensity to save is ___________.

less than 1

greater than 1

equal to 1

negative

the companies sign the shares before issuing them