BA 206 Macroeconomics Final Exam Answers
Barter transactions involve the use of money.
• Question 2
The use of money as a medium of exchange represents the mostimportant service that money renders.
• Question 3
Currency includes demand deposits.
• Question 4
The money supply known as M1 includes all assets that are good storesof value.
• Question 5
A primary tool of the Federal Reserve System is open market operations.
• Question 6
Commercial banks and credit unions create money in concert with theFed.
• Question 7
Providing a secure place for savings is not a major function of financialinstitutions.
• Question 8
The Fed’s reserve requirement ratio can reduce the monetary base.
• Question 9
If bankers want to retain reserves of 25% against all deposits, if the Fedissues $100 billion in currency, and if private individuals keep all moneyin banks, then once the banks are fully loaned up, the money supply willconsist of $400 billion in demand deposits.
• Question 10
The Long-run Aggregate Supply Curve that is compatible with the classicalmacroeconomc model is a vertical line at full employment.
• Question 11
When the federal government spends more than it collects, it must issuemore debt or more monetary base.
• Question 12
Keynesians tend to believe that massive tax cuts and new government spending are cures for recession.
• Question 13
There are currently 13 Federal Reserve Districts.
• Question 14
One of the 3 tools of the Federal Reserve is fiscal policy.
• Question 15
Monetary policy of the Federal Reserve affects the monetary base toachieve its goals of rates of inflation and interest.
• Question 16
The buying of securities in the open market by the Federal Reserve will augment the monetary base of the economy.
• Question 17
The selling of securities in the open market by the Federal Reserve willactually decrease the monetary base by...