Money, Part 1
In economics, money is defined as:
A. the total value of one's assets in current prices.
B. any asset people generally accept in exchange for goods and services.
C. the total value of one's assets minus the total value of one's debts.
B. any asset people generally accept in exchange for goods and services.
The most liquid measure of money supply would be:
A. M1
B. M2
C. M3
A. M1
The Federal Reserve was established in 1913 to primarily:
A. Stop bank panics by acting as a bank of last resort.
B. Prevent bad loans by requiring banks to hold reserves.
C. Stimulate the economy by increasing bank reserves.
A. Stop bank panics by acting as a bank of last resort.
Nebraska is located int he 10th Federal Reserve District. Which city in the United States would represent Nebraska in the Federal Reserve System?
A. Omaha, Nebraska
B. Minneapolis, Minnesota
C. Kansas City, Missouri
C. Kansas City, Missouri
Fiscal policy refers to changes in:
A. the money supply and interest rates to achieve macroeconomic policy objectives.
B. state and local taxes and purchases to achieve macroeconomic policy objectives.
C. federal taxes and purchases to achieve macroeconomic policy objectives.
C. federal taxes and purchases to achieve macroeconomic policy objectives.
Government transfer payments include which of the following?
A. Social Security and Medicare programs.
B. National Defense programs.
C. Grants to State and Local Governments.
A. Social Security and Medicare programs.
Gold is an example of a:
A. fiat money.
B. barter money.
C. commodity money.
C. commodity money.
M1 measures the money supply equal to:
A. Currency plus checking account balances.
B. Currency plus checking account balances plus traveler's checks.
C. Currency plus checking account balances plus traveler's checks plus savings account balances.
B. Currency plus checking account balances plus traveler's checks.
Which of the following is NOT a function of the Federal Reserve System today?
A. Insuring deposits in the banking system.
B. Acting as a lender of last resort.
C. Changing the money supply and/or interest rates.
A. Insuring deposits in the banking system.
If the Federal Reserve lowers the money supply and raises the interest rate, the Fed is practicing:
A. contractionary monetary policy.
B. contractionary fiscal policy.
C. expansionary monetary policy.
A. contractionary monetary policy.
Government spending and taxes that increase or decrease along with the business cycle and do not require Congressional approve on the spending is referred to as:
A. Discretionary spending.
B. Automatic stabilizers.
C. Expansionary fiscal policy.
B. Automatic stabilizers.
The federal government debt equals:
A. the total value of U. S. Treasury bonds outstanding.
B. the accumulation of past budget deficits.
C. government spending minus tax revenues.A. the total value of U. S. Treasury bonds outstanding.
Which is NOT one of the criteria necessary for a commodity to make a suitable medium of exchange?
A. It should have intrinsic value.
B. It should be valuable relative to its weight.
B. It should be durable as to not wear away from storage.
A. It should have intrinsic value.
What is not counted in M1?
A. Credit card balances
B. Checking account balances
C. Currency and coinage
A. Credit card balances
The seven members of the Board of Governors of the Federal Reserve are appointed by:
A. The United States Congress.
B. The United States Treasury Department.
C. The President of the United States.
C. The President of the United States.
Expansionary monetary policy refers to the _____ to increase real GDP.
A. government's increasing spending and lower taxes
B. Federal Reserve's decreasing the money supply and increasing interest rates
C. Federal Reserve's increasing the money supply and decreasing interest rates.
C. Federal Reserve's increasing the money supply and decreasing interest rates.
Before the Great Depression of the 1930s, the majority of government spending took place at the:
A. federal level.
B. state level only.
C. state and local levels.
C. state and local levels.
A. the interest rate it can borrow money at is very high.
B. government debt issued through Treasury bonds is not taxed, so there is very little chance of default.
C. the size of the interest payments on the debt the U. S. owes is low relative to the size of the federal budget.
C. the size of the interest payments on the debt the U. S. owes is low relative to the size of the federal budget.
Paper currency is a:
A. Barter money.
B. Fiat money.
C. Commodity money.
B. Fiat money.
Which of the following measures of the money supply is the largest?
A. M1
B. M2
C. M3
B. M2
Which of the following is NOT one of the monetary policy tools the Fed has at its disposal?
A. Open market operations
B. Discount loan policy
C. Reduced credit limits
C. Reduced credit limits
The ability of the Fed to use monetary policy to affect important aspects like real GDP ultimately depends of the Fed's ability to affect:
A. taxation rates.
B. foreign exchange rates.
C. real interest rates.
C. real interest rates.
What is the largest source of revenue collected by the federal government today?
A. Corporate income tax.
B. Individual income tax.
C. Excise tax.
The difference between the pretax and posttax returns to an economic activity like working refers to:
A. The tax wedge.
B. The U. S. National Debt.
C. The principal-agent problem.
A. The tax wedge.
Fiat money:
A. Is rarely used in modern economies.
B. Functions well only if it can be redeemed for gold or other precious medals.
C. Has no or very little value except as money.
C. Has no or very little value except as money.
What is the largest component of M2?
A. Checking accounts
B. Currency and coinage
C. Savings accounts
C. Savings accounts
A. Fiscal Policy Targets.
B. Monetary Policy Targets.
C. Policy Tools.
B. Monetary Policy Targets.
How do lower interest rates affect consumption economic activities in the marketplace?
A. lower interest rates encourage buying on credit.
B. lower interest rates do not affect consumption.
C. lower interest rates encourage saving rather than consumption.
A. lower interest rates encourage buying on credit.
Fiscal policy is determined by:
A. Congress and the Federal Reserve.
B. The Federal Reserve.
C. Congress and the President of the United States.
C. Congress and the President of the United States.
Which of the following is true regarding the current U. S. Tax Code?
A. The U. S. has no current official tax code.
B. The IRS estimates taxpayers only spend a small amount of hours filling out tax returns per year.
C. The current tax code is extremely complicated and is over 3,000 pages long.
C. The current tax code is extremely complicated and is over 3,000 pages long.