1
If a recessionary gap exists, it can be offset by ________________ fiscal policy
Expansionary
Government programs such as Social Security or Medicare are examples of _______
Entitlements
_______ is the most liquid asset
Money or Cash
The ______ is the percentage of reserves a bank is required to hold against deposits.
reserve ratio
_______ refers to exchange of goods and services between countries.
International trade
________is the ability to produce a good or service at a lower opportunity cost than can other producers.
Comparative advantage
When the government deliberately alters its level of spending and/or taxes in order to achieve specific national economic goals, it is exercising______
Discretionary fiscal policy
An increase in the public debt would most likely indicate that the ______ has increased.
Budget deficit
A ___________ is an attempt by many of a bank’s depositors to convert transactions and time deposits into currency out of fear that the bank’s liabilities may exceed its assets.
Bank run
______ is the interest rate that the Federal Reserve charges for reserves that it lends to depository institutions.
Discount rate
The _______ is the interest rate at which banks can borrow excess reserves from other banks.
federal funds rate
_______ are restrictions on imports, usually applied to one or several specific countries.
Quotas
An example of expansionary fiscal policy could be
A) to increase the nation's money supply.
B) to reduce tax rates.
C) to reduce government spending.
D) to reduce interest rates.
B
Planned investment, the federal budget deficit would be an example of ______
Flow Variable
Fractional reserve banking refers to a banking system in which bank _____ are less than bank ______.
deposits; reserves
Currency and transactions deposits are money because of their_______ and __________
Acceptability; Predictability of value
When the Federal Reserve conducts open market purchases to increase bank reserves without trying to alter the interest rate that is already close to zero, the policy action is called _______
quantitative easing
European Union (EU), North American Free Trade Agreement (NAFTA), The Association of Southeast Asian Nations (ASEAN) are examples of _______
Regional trade bloc
Actions on the part of the private sector in spending income that offset government fiscal policy actions
Direct Expenditure Offsets
The difference between net public debt and gross public debt is
A) all government interagency borrowing.
B) the interest paid annually on the public debt.
C) the amount owed to individuals and firms outside the United States.
D) the current year's budget deficit from the amount of public debt at the start of the year.
A
In the long run, the increases in aggregate demand and higher government budget deficits have ______ on equilibrium real GDP per year.
no effect
The transactions approach to measuring money: M1
M1=________+_______+_____________
Note: All three needs to be correct for earning points
M1=Currency and coins+Transactions (checkable) deposits+Traveler’s checks
What is the equation of exchange?
MsV ≡ PY
After joining the EU, the UK started importing cars from Germany, a fellow EU member, instead of Japan.
This is an example of _______
Trade Diversion
One part of the supply-side argument is that lower _____ can increase ______.
marginal tax rates
total tax revenues