Question Question 1 A Federal Reserve official notes: “A re

05 Jun Question Question 1 A Federal Reserve official notes: “A re

QuestionQuestion
Question 1

A Federal Reserve official notes: “A re
Question 1

A Federal Reserve official notes: “A restrictive monetary policy can force a contraction of the money supply, but an expansionary monetary policy may not achieve an expansion of the economy.” The official has described the problem of the:

Answer

a. Inflexibility of monetary policy tools

b. Change in taxes on monetary policy

c. Cyclical asymmetry of monetary policy

d. Political acceptability of monetary policy

Question 2

A Federal budget deficit exists when:

Answer

a. Federal government assets are less than liabilities

b. Federal government spending exceeds tax revenues

c. Federal government spending is increasing

d. Federal government taxation is decreasing

1 points

Question 3

A budget surplus means that:

Answer

Government expenditures are greater than revenues in a given year

Government revenues are greater than expenditures in a given year

Government revenues are greater than expenditures throughout time

Government expenditures are falling and government revenues are rising

1 points

Question 4

A checkable deposit at a commercial bank is a(n):

Answer

Asset to the bank

Liability to the bank

Liability to the depositor

Asset to the Federal Reserve

1 points

Question 5

A commercial bank has actual reserves of $1 million and checkable-deposit liabilities of $9 million, while the required reserve ratio is 10 percent. The excess reserves of the bank are:

Answer

$50,000

$100,000

$900,000

$1 million

1 points

Question 6

A decrease in the interest rate will cause a(n):

Answer

Increase in the transactions demand for money

Decrease in the transactions demand for money

Decrease in the amount of money held as an asset

Increase in the amount of money held as an asset

1 points

Question 7

Another term for the full-employment budget is the:

Answer

Actual budget

Cyclical budget

Standardized budget

Administrative budget

1 points

Question 8

Answer the next question(s) based on the following consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in millions of dollars.

Picture

Refer to the above data. The commercial banking system can expand the supply of money by a maximum of:

Answer

$23.5 million

$36.5 million

$51.9 million

$66.6 million

1 points

Question 9

Assume that the required reserve ratio is 25 percent. If a commercial bank has $2 million cash in its vault, $1 million in short-term government securities, $3 million on deposit at a Federal Reserve Bank, and $6 million in checkable deposits, its total reserves equal:

Answer