John Tyler Macro Final Review #2

Fiscal policy refers to the

• deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.

• deliberate changes in government spending and taxes to achieve greater equality in the distribution of income.

• altering of the interest rate to change aggregate demand.

• fact that equal increases in government spending and taxation will be contractionary.

The amount that a commercial bank can lend is determined by its

• required reserves.

• excess reserves.

• outstanding loans.

• outstanding checkable deposits.

Open-market operations include

• changes in the reserve ratio.

• repos and reverse repos.

• paying interest on excess reserves held at Federal Reserve Banks.

• changes in the discount rate.

The idea that money has "time value" refers to the fact that

• people prefer to receive a given sum of money in the future rather than in the present.

• money can be used to purchase the services of labor, as measured in hourly units.

• a specific amount of money is more valuable to a person the sooner it is received.

• compound interest converts future dollars into a greater amount of current dollars.

The group of three economists appointed by the president to provide fiscal policy recommendations is the

• Council of Economic Advisers.

• Joint Economic Committee.

• Bureau of Economic Analysis.

• Federal Reserve Board of Governors.

The paper money used in the United States is

• National Bank notes.

• Treasury notes.

• United States notes.

• Federal Reserve notes.

Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent. If the bank's required and excess reserves are equal, then its actual reserves

• are $1,000,000.

• are $10,000.

• are $20,000.

• cannot be determined from the given information.

When a commercial bank borrows from a Federal Reserve Bank,

• the supply of money automatically increases.

• it indicates that the commercial bank is unsound financially.

• the commercial bank's lending ability is increased

• the commercial bank's reserves are reduced.

Bonds represent

• loans to governments and corporations.

• all financial assets guaranteed to pay interest.

• ownership of a company.

• a claim on company dividends.

Trade is

• the mandatory exchange of goods and services between any two nations.

• the voluntary exchange of goods, services, or assets between two or more parties.

• the exchange of goods but not services between two or more parties.

• seldom beneficial to all parties, usually only labor-intensive countries benefit.