Question 1

Who made the following famous statement: "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it.If it keeps moving, regulate it.And if it stops moving, subsidize it."

Accepted Answer

The statement is attributed to Ronald Reagan, who was not listed among the choices.

Question 2

The percentage of deposits that must be held as reserves is called

Accepted Answer

The required reserve ratio is the percentage of deposits that banks are required to hold as reserves by the central bank. This ratio differs from country to country and is a tool used by the central bank to control the money supply. Option A (excess reserves) refers to reserves held by banks in excess of the required reserves, while option B (required reserves) refers to the total amount of reserves that banks are required to hold. Option D is incorrect as one of the options must be correct.

Question 3

Deposits that add new reserves to the bank where they are deposited are called:

Accepted Answer

Primary deposits are deposits that add new reserves to the bank where they are deposited. This is in contrast to secondary deposits, which refer to transfers of existing reserves between banks, and derivative deposits, which refer to deposits created through financial instruments such as loans or bonds. Special Drawing Rights are a form of international reserve assets created by the International Monetary Fund.

Question 4

Banking system reserves plus currency held by the nonbank public is referred to as the:

Accepted Answer

The monetary base, also known as the "base money" or "high-powered money," consists of the currency in circulation and the amount of reserves held by banks at the central bank. It is the foundation upon which the rest of the money supply is built through the fractional reserve banking system. Therefore, choice B is correct. Choices A, C, and D are incorrect because the money supply refers to the total amount of money in circulation, the monetary multiplier is a formula used to estimate the total amount of money that will be created through fractional reserve banking, and the monetary requirement refers to the amount of money that banks are required to hold as reserves by the central bank.

Question 5

Primary groups of policy makers that are actively involved in achieving a nation'sU.S.economic policy objectives include all of the following EXCEPT:

Accepted Answer

All three options listed (Federal Reserve System, President, Congress) are primary policy makers actively involved in achieving U.S. economic policy objectives. Therefore, the correct answer is D, all of the above.

Question 6

Continuing federal programs that stabilize economic activity are called

Accepted Answer

The answer of Continuing federal programs that stabilize economic activity...

Question 7

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Accepted Answer

The statement mentions that business firms and financial institutions were faced with their own financial difficulties due to their own borrowing during years of tight money and high interest rates, which is included in choice E. Therefore, all the other choices are characteristics of the perfect financial storm except for E.

Question 8

Government financing of large budgetary deficits:

Accepted Answer

Government financing of large budgetary deficits may temporarily stimulate economic activity, but it can also crowd out private borrowers by increasing demand for loanable funds and driving up interest rates. This can make it harder and more expensive for private individuals and businesses to access credit, which can ultimately harm the economy in the long run. Absorbing savings and decreasing interest rates (A) is not typically a result of government financing of deficits, as this tends to increase demand for loanable funds and push up interest rates. Monetizing the deficit (C) refers to the process by which the government prints money to finance its spending, which can lead to inflation and undermine the value of the currency. Reducing total consumer spending and demand (D) is also not typically a result of government financing of deficits, as deficit spending injects money into the economy and can increase demand.

Question 9

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Accepted Answer

All of the options listed were factors that contributed to the perfect financial storm of 2008. The bursting of the housing price bubble, the decline in stock market prices, the difficulty in valuing mortgage-related debt securities, and the increasing number of loan and mortgage defaults all played a role in the economic collapse.

Question 10

Under the leadership of ______________, during the 2007-2009 financial crisis, the Treasury was actively involved in trying to help financial institutions on the brink of collapse find help through mergers with financially stronger institutions. Important enough to test? Note sure "a" and "c" weren't involved, too.

Accepted Answer

Henry Paulson was the U.S. Treasury Secretary during the 2007-2009 financial crisis and was actively involved in trying to help financial institutions on the brink of collapse find help through mergers with financially stronger institutions.

Question 11

Under the leadership of ______________, during the 2007-2009 financial crisis, the Treasury was actively involved in trying to help financial institutions on the brink of collapse find help through mergers with financially stronger institutions.

Accepted Answer

The answer of Under the leadership of ______________, during the...

Question 12

Who made the following famous statement: "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it.If it keeps moving, regulate it.And if it stops moving, subsidize it."

Accepted Answer

The answer of Who made the following famous statement: "The...

Question 13

Automatic stabilizers include all of the following except:

Accepted Answer

The answer of Automatic stabilizers include all of the following...

Question 14

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Accepted Answer

The Supreme Court is not directly involved in implementing economic policies or setting economic objectives for the nation. They primarily interpret and uphold the law, but do not have an active role in economic policymaking. The President and Congress are the primary policymakers involved in shaping economic policy.

Question 15

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Accepted Answer

The answer of Primary groups of policy makers that are...

Question 16

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Accepted Answer

The statement "Stock market prices began a rally in 2007 and began a sharp incline" is incorrect. The stock market actually began to decline in 2007 and ultimately lost significant value during the crisis in 2008.

Question 17

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Accepted Answer

The answer of Primary groups of policy makers that are...

Question 18

Debt management includes all of the following except:

Accepted Answer

Debt management involves decisions about the types of securities to sell, interest rate patterns, and types of refunding, so "all of the above" is not an exception.

Question 19

Transactions that affect bank reserves can be initiated by the:

Accepted Answer

The nonbank public can initiate transactions that affect bank reserves by depositing or withdrawing funds from their accounts. The Federal Reserve System can also conduct open market operations that involve buying or selling government securities, which affects the level of bank reserves. The U.S. Treasury can also make deposits or withdrawals from their accounts, which can affect bank reserves. Thus, all of the above are correct.

Question 20

Continuing federal programs that stabilize economic activity are called

Accepted Answer

Automatic stabilizers are federal programs that work to stabilize economic activity by automatically increasing spending and decreasing taxes during economic downturns, and vice versa during economic upturns. Examples include unemployment insurance, Medicaid, and SNAP (Supplemental Nutrition Assistance Program). Transfer payments and social insurance programs are also federal programs that provide financial assistance to individuals or groups, but they do not have the automatic stabilizing effect of adjusting with the economy.

Quiz 5: Policy Makers and the Money Supply

Who made the following famous statement: "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it.If it keeps moving, regulate it.And if it stops moving, subsidize it."

The percentage of deposits that must be held as reserves is called

Deposits that add new reserves to the bank where they are deposited are called:

Banking system reserves plus currency held by the nonbank public is referred to as the:

Primary groups of policy makers that are actively involved in achieving a nation'sU.S.economic policy objectives include all of the following EXCEPT:

Continuing federal programs that stabilize economic activity are called

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Government financing of large budgetary deficits:

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Under the leadership of ______________, during the 2007-2009 financial crisis, the Treasury was actively involved in trying to help financial institutions on the brink of collapse find help through mergers with financially stronger institutions.

Who made the following famous statement: "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it.If it keeps moving, regulate it.And if it stops moving, subsidize it."

Automatic stabilizers include all of the following except:

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Debt management includes all of the following except:

Transactions that affect bank reserves can be initiated by the:

Continuing federal programs that stabilize economic activity are called