Economy Test 3 Flashcards

In macroeconomics,________describes a situation in which two people each want to exchange some good or service that the other can provide.

Which of the following is omitted in a barter transaction?

Bill performs plumbing upgrades for Alice in exchange for incorporating his business.

____ is a completely inadequate mechanism ______in a modern and advanced economy.

In macroeconomics, a ___ describes the common way in which market values are measured in an economy.

In modern economies, credit cards are a _____ because of their wide acceptance as method of payment for both goods and services.

If mollusk shells were accepted as a method of payment in modern day markets, what economic role would they play in the financial system?

Which of the following is a valid criticism of the use of money as store as a store of value in modern economies?

Which of the following would be classified in the M1 category of the money supply?

With respect to measuring the money supply, which of the following terms describes a checking account?

_______are included in the aggregate amount of MI money currently in circulation.

Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?

In modern economies, ______ receive money from savers and provide fund to borrowers.

_______are funds that the bank keeps on hand that are not loaned out or invested in bonds.

The process of banks making loans in financial capital markets is intimately tied to the _________.

Banks typically come under financial stress because of _______.

If loans become far less available, then sectors of the economy ______, like business investment home construction, and car manufacturing can be dealt a crushing blow.

________ that require the depositor to commit to leaving their funds in the bank for a certain period of time, in exchange for a higher rate of interest. They are also called ________.

The term ______ describes the proportion of deposits that the bank must hold in the form of reserves and are not loaned out or invested in bonds.

_______ are a form of financial instrument by which corportations and governments borrow money from financial investors with promise to repay with interest.

The market where loans are made to borrowers is called the _____.

The market in which loans are bought and sold is called the ____.

In the United States, which institution determines the quantity of money in the economy while considering it to be one of its most important tasks?

Which of the following institutions oversees the safety and stability of the US banking system?

Which of the following is a traditional tool used by the Fed during recessions?

What term is used to describe that proportion of deposits banks are legally required to deposit with the central bank?

What term is used to describe the interest rate charged by the central bank when it makes loans to commercial banks?

If the central bank that wants to increase the quantity of money in the economy will, _____.

If the central bank desires to reduce the quantity of money in the economy can _______.

The quantitative easing policies adopted by the Federal Reserve are generally considered to be ___________.

Which of the following best described an innovative and nontraditional method used by the Federal Reserve to expand the quantity of money and credit during the 2008-2009 U.S. recession?

The central bank requires Southern Bank & Trust to hold 10% of deposits as reserves. Southern Bank & Trust's corporate policy prohibits it from holding excess reserves. Assume the central bank sells $25 million in bonds to Southern Bank & Trust. Given this scenario, which of the following will result?

Atlantic Bank & Trust is required to hold 10% of deposits as reserves. If the central bank increases the discount rate, what would be the corresponding action taken by Atlantic Bank & Trust?

The Central Bank has raised its reserve requirements from 10% to 12%. If Southern Bank finds that it is not holding enough in reserves to meet the higher requirements, then Southern Bank will likely __________________.

When the central bank decides to increase the discount rate, the _____.

When the central bank decides it will sell bonds using open market operations _______.

________ economists place an emphasis on ______ run economic performance.

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _____ and its _______.

Which of the following is a building block of neoclassical economics?

Which of the following government policies would be supported by neoclassical macroeconomic assumptions?

Which of the following represents a Keynesian point of view of macroeconomics?

Which of the following is a distinguishing characteristic of the neoclassical view?

A vertical AS curve means that the level of aggregate supply (or potential GDP) will determine the real GDP of the economy, regardless of the level of : _____.

In the neoclassical model, economic growth over time shifts potential GDP and the _____ gradually to the right.

When the central bank lowers the reserve requirement on deposits ______.

Which of the following events would cause interest rates to increase?

When the Federal Reserve announces that it is implementing a new interest rate policy, the _____ will be affected?

How are the specific interest rates for the lending and borrowing markets determined?

When the Central Bank acts in a way that causes the money supply to increase while aggregate demand remains unchanged, it is ______.

When a Central Bank takes action to decrease the money supply and increase the interest rate, it is following ______.

Regardless of the outcome in the long run, _______ always has the effect of stimulating the economy in the short run.

What is the name given to the equation MV=PQ?

According to the quantity theory, if constant growth in the money supply is combined with fluctuating velocity, which of the following is most likely to result?

According to the basic quantity equation of money, if price and output fall while velocity increases, then ______.

If you were to survey central bankers from around the world and ask them what they believe the primary task of monetary policy should be, what would be the most popular answer likely be?

Consumption, investment, government spending, exports, and imports are:

If markets throughout the global economy all have flexible and continually adjusting prices, then:

Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a ______ for minimizing their effects these recessions and depressions.

Aggregate demand is more likely ______ than aggregate supply in the short run.

In the Keynesian framework, ________ will not cause a shift of the Aggregate Supply curve.

According to the Keynesian framework, _____may cause a recession, but not inflation.

According to the Keynesian framework, which of the following may help a country reduce inflation, but will not help that country to get out of a recession?

A key assumption of the Keynesian economic framework is that:

According to the ________ argument, a market oriented economy has no obvious way to implement a plan of systematic wage reductions.

In macroeconomics, what name is given to the costs of changing prices that businesses must consider?

According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the:

Over the long run, a surge in aggregate demand from a neoclassical perspective will most likely result in:

If a neoclassical model shows increasing wages in the economy over the long run, what else will likely occur?

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur?

Suppose that a rise in business confidence has led to more investment in the economy and higher levels of output. In the short run Keynesian analysis, the rise in aggregate demand will:

From a neoclassical view, which of the following is a true statement?

Which of the following is a valid criticism of the rational expectations theory?

In the neoclassical view, changes in _________ can only have a short run impact on output and on unemployment

The theory of _____ holds that people will use all information available to them to form the most accurate possible expectations about the future.

From a neoclassical view, which of the following is less important?

The shape of the _____involves a tradeoff between unemployment and inflation.

Suppose that productivity growth in an economy over a two year period has fallen to less than 2% per year, causing a serve recession. From the neoclassical view, which of the following will be more important in these circumstances?

Using a neoclassical model, what will the level of cyclical unemployment be when an economy is producing a potential GDP?

Referring to a Keynesian Phillips curve, a reduction in inflation is likely to cause:

A typical Keynesian aggregate supply curve _______ and a typical Keynesian Phillips curve _________.

If aggregate supply is vertical, then aggregate demand does not affect: