Ba 206 Macroeconomics Final Exam Solution

BA 206 Macroeconomics Final Exam Solution

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BA 206 Macroeconomics Final Exam Solution

• Question 1

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.

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