Quiz 6 ECON 2030
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This 7 page Class Notes was uploaded by jcsumlin on Friday October 7, 2016. The Class Notes belongs to ECON 2030 - 2 at Auburn University taught by Diana Alessandrini in Fall 2016. Since its upload, it has received 9 views.
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Date Created: 10/07/16
QUIZ 6 Due Oct 7 at 6pm Points 100 uestions 11 vailable Oct 3 at 12am Oct 7 at 6pm 5 days Time Limit None Attempt History Attempt Time Score LATEST Attempt 1 4 minutes 82.67 out of 100 Correct answers will be available on Oct 7 at 6:01pm. Score for this qui82.67 out of 100 Submitted Oct 7 at 1:42pm This attempt took 4 minutes. 10 / 10 pts Question 1 Use the information in the table to answer the following questions. Loanable funds Loanable funds Real interest rate demanded supplied (percent per year) (trillions of 2009 dollars) 4 8 5 5 7.5 5.5 6 7 6 7 6.5 6.5 8 6 7 9 5.5 7.5 10 5 8 If the government budget is balanced, in equilibrium aggregate investment equals $ 6.5 trillion, public saving equals $ [ Select ] trillion and the real interest rate is [ Select ] . If the government runs a deficit of $1 trillion, aggregate investment in equilibrium equals $ [ Select ] trillion, private saving equals $ [ Select ] trillion, national saving equals $ 6 trillion and the interest rate is 8 . Answer 1: 6.5 Answer 2: 6.5 Answer 3: 7 Answer 4: 6 Answer 5: 7 Answer 6: 6 Answer 7: 8 Question 2 10 / 10 pts Crowding out tends to increase private saving, increase the real interest rate, decrease investment. Answer 1: increase Answer 2: increase Answer 3: decrease Question 3 10 / 10 pts You pay $20 for a meal at a restaurant. This is an example of money serving as a medium of exchange. . Sarah has $1000 in her bank account. This is an example of money serving as a store of value . A $25,000 price tag on a new car is an example of money used as unit of account . Answer 1: a medium of exchange. Answer 2: a store of value Answer 3: unit of account Partial Question 4 6.67 / 10 pts When calculating the stock of money in the economy, checking deposits are included, checks in the checkbook are not included, credit cards are included. Answer 1: are Answer 2: are not Answer 3: are 5 / 5 pts Question 5 The Federal Reserve does NOT do which of the following? Supervise commercial banks. Lend money to the public. Issue bank notes (i.e. paper bills). Conduct monetary policy. 10 / 10 pts Question 6 Year 2014 Year 2015 MONEY SUPPLY 1,500 1,550 REAL GDP 12,000 12,000 The table above provides information about a hypothetical economy in years 2014 and 2015. According to the quantity theory of money, the inflation rate in 2015 should be ____%. Enter your answer below, round your response to two decimal places. 3.3300 Question 7 5 / 5 pts Liabilities of a commercial bank include notes and coins in the bank's vault loans to other banks a deposit account at the Fed the value of its depositors' accounts the bank's stock holdings 10 / 10 pts Question 8 An open market purchase of securities by the Fed increases commercial banks' reserves and decreases commercial banks' securities. Answer 1: increases Answer 2: decreases 10 / 10 pts Question 9 For a commercial bank, the term "reserves" refers to a banker's concern ("reservation") in making loans to an individual without a job. the profit that the bank retains at the end of the year. its deposits at the Federal Reserve. the net interest that it earns on loans. Incorrect Question 10 0 / 10 pts If the Central Bank wants to increase the stock of money in the economy, it can increase the number of commercial banks issue government bonds implement an open market sale purchase government bonds from commercial banks 6 / 10 pts Partial Question 11 Read chapter 8 of the textbook before answering this question. The desired reserve ratio is the fraction of deposits that banks are required to hold by law The discount rate is the interest rate paid by commercial banks to borrow money from the Fed The required reserve ratio is the fraction of deposits that banks want to keep If the reserve ratio is less than 1, the economy has a(n) fractional reserve banking system. If the reserve ratio equals 1, the economy has a(n) 100% reserve banking system. Answer 1: the fraction of deposits that banks are required to hold by law Answer 2: the interest rate paid by commercial banks to borrow money from the Fed Answer 3: the fraction of deposits that banks want to keep Answer 4: fractional Answer 5: 100% Quiz Score: 82.67 out of 100
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