12. An example of expansionary fiscal policy would be (1 point)
cutting taxes.
cutting government spending.
cutting production of consumer goods.
cutting prices of consumer goods.
13. When you buy a United States savings bond, you (1 point)
loan money to the government
borrow money from a savings and loan association.
donate money for special government projects.
pay for your child's college education.
14. Why does the Federal Reserve alter monetary policy? (1 point)
to regulate the banking industry
to provide services to member banks
to enable banks to clear checks
to lessen the effect of natural business cycles
15. How many Federal Reserve Districts are there? (1 point)
6
9
12
20
16. Why does a bank sometimes hold excess reserves? (1 point)
to be sure they can meet their customers' demands
to protect against high prices
to make check clearning easier
to keep from lending too much money
17. What is one possible short-term effect of an easy money policy? (1 point)
decreasing inflation
higher interest rates
a contracting money supply
increasing investment spending
18. Which of the these situations is most likely to cause the Fed to introduce a tight money supply? (1 point)
A recession has reduced aggregate demand and increased unemployment.
The federal government passes a new budget with a large deficit.
The economy is prosperous with relatively low inflation and low unemployment.
The economy is expanding quickly and inflation is a concern.
19. Which of these tools is an example of monetary policy? (1 point)
reducing income taxes
changing reserve requirements
increasing government spending
borrowing money through deficit spending
20. What is the relationship between interest rates and demand for money? (1 point)
As interest rates decrease, demand for money increases.
As interest rates increase, demand for money increases.
Interest rates are determined by demand for money.
Interest rates and demand for money are unrelated.
21. To what category do a person's earnings, the dollar value of a good or service, the value of a property, and the value of a company's profits belong? (1 point)
proportional tax bases
taxable income
tax bases
tax brackets
22. How do changes in interest rates affect the money supply? (1 point)
As interest rates fall, people generally hold more cash, restricting the money supply.
As interest rates rise, people generally keep their wealth in assets that pay returns, expanding the money supply.
As interest rates level off, people charge more and hold more cash expanding the money supply.
As interest rates rise, people generally keep their wealth in assets that pay returns, restricting the money supply.
23. How would an increase in the required reserve ratio affect borrowers? (1 point)
It would force banks to lower their interest rates, which would benefit many borrowers.
It would force banks to raise their monthly charges, which would hurt many borrowers.
It would force banks to recall a significant number of loans, which would hurt many borrowers.
It would prompt banks to lend more money, which would benefit many borrowers.
24. What is the primary difference between inside and outside policy lags? (1 point)
Inside lags are delays in the implementation of policy, and outside lags indicate the time it takes a new policy to become effective.
Inside lags are changes within the structure of a company, and outside lags refer to external policy changes.
Inside lags indicate the time it takes to implement a new policy, and outside lags are delays in the implementation of a new policy.
Inside lags occur within the Federal Reserve System, and outside lags occur in the independent regional banks.
cutting taxes.
cutting government spending.
cutting production of consumer goods.
cutting prices of consumer goods.
13. When you buy a United States savings bond, you (1 point)
loan money to the government
borrow money from a savings and loan association.
donate money for special government projects.
pay for your child's college education.
14. Why does the Federal Reserve alter monetary policy? (1 point)
to regulate the banking industry
to provide services to member banks
to enable banks to clear checks
to lessen the effect of natural business cycles
15. How many Federal Reserve Districts are there? (1 point)
6
9
12
20
16. Why does a bank sometimes hold excess reserves? (1 point)
to be sure they can meet their customers' demands
to protect against high prices
to make check clearning easier
to keep from lending too much money
17. What is one possible short-term effect of an easy money policy? (1 point)
decreasing inflation
higher interest rates
a contracting money supply
increasing investment spending
18. Which of the these situations is most likely to cause the Fed to introduce a tight money supply? (1 point)
A recession has reduced aggregate demand and increased unemployment.
The federal government passes a new budget with a large deficit.
The economy is prosperous with relatively low inflation and low unemployment.
The economy is expanding quickly and inflation is a concern.
19. Which of these tools is an example of monetary policy? (1 point)
reducing income taxes
changing reserve requirements
increasing government spending
borrowing money through deficit spending
20. What is the relationship between interest rates and demand for money? (1 point)
As interest rates decrease, demand for money increases.
As interest rates increase, demand for money increases.
Interest rates are determined by demand for money.
Interest rates and demand for money are unrelated.
21. To what category do a person's earnings, the dollar value of a good or service, the value of a property, and the value of a company's profits belong? (1 point)
proportional tax bases
taxable income
tax bases
tax brackets
22. How do changes in interest rates affect the money supply? (1 point)
As interest rates fall, people generally hold more cash, restricting the money supply.
As interest rates rise, people generally keep their wealth in assets that pay returns, expanding the money supply.
As interest rates level off, people charge more and hold more cash expanding the money supply.
As interest rates rise, people generally keep their wealth in assets that pay returns, restricting the money supply.
23. How would an increase in the required reserve ratio affect borrowers? (1 point)
It would force banks to lower their interest rates, which would benefit many borrowers.
It would force banks to raise their monthly charges, which would hurt many borrowers.
It would force banks to recall a significant number of loans, which would hurt many borrowers.
It would prompt banks to lend more money, which would benefit many borrowers.
24. What is the primary difference between inside and outside policy lags? (1 point)
Inside lags are delays in the implementation of policy, and outside lags indicate the time it takes a new policy to become effective.
Inside lags are changes within the structure of a company, and outside lags refer to external policy changes.
Inside lags indicate the time it takes to implement a new policy, and outside lags are delays in the implementation of a new policy.
Inside lags occur within the Federal Reserve System, and outside lags occur in the independent regional banks.