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A government program that invested in financial institutions and automakers to help stabilize markets during the great recession of 2008 was the

ECO105 Macroeconomics

Module 5 Quiz   

Question 1A government program that invested in financial institutions and automakers to help stabilize markets during the great recession of 2008 was the _____

 

  Social Security System.

 

  Troubled Asset Relief Program.

 

  Supplemental Security Income Program.

 

  Public Housing Assistance Program.

 

 Question 2The objective of a demand-management policy is to ___

 

  decrease aggregate demand to smooth economic fluctuations.

 

  increase or decrease aggregate demand to smooth economic fluctuations.

 

  increase aggregate demand to smooth economic fluctuations.

 

  increase or decrease aggregate supply to smooth economic fluctuations.

 

 Question 3The chair of the Board of Governors of the Fed serves _____.

 

  a fourteen-year term.

 

  a seven-year term.

 

  a four-year term.

 

  a two-year term that coincides with that of members of Congress.

 

 Question 4If the purchasing power of a dollar measured in terms of the base year was $1, what was the price index?

 

  41

 

  100

 

  244

 

  42

 

 Question 5Which of the following is true of the unit of account function of money?

 

  It makes money durable in nature.

 

  It implies that money can be used to save up purchasing power.

 

  It makes the values of goods and services known.

 

  It implies that money should be made of something valuable.

 

 Question 6A new tax introduced by the government will _____.

 

  increase disposable income.

 

  lead to a reduction in government spending.

 

  lead to an increase in investment.

 

  decrease disposable income.

 

 Question 7A decrease in net taxes _____.

 

  lowers aggregate expenditure by lowering disposable income, thereby decreasing consumption.

 

  raises aggregate expenditure by raising disposable income, thereby increasing consumption.

 

  raises aggregate expenditure by raising disposable income, thereby decreasing consumption.

 

  lowers aggregate expenditure by lowering disposable income, consumption remaining constant.

 

 Question 8Each member of the Board of Governors of the Fed serves _____.

 

  until a new president is elected.

 

  a four-year term that does not coincide with the term of the current president.

 

  a four-year term that begins at the same time as that of the newly elected president.

 

  a fourteen-year term.

 

 Question 9As a result of the financial crises in 2008, which bank was seized by the FDIC after a 10-day bank run during which depositors withdrew $16 billion, or about 10 percent of all deposits?

 

  JPMorgan Chase

 

  Bank of America

 

  Washington Mutual

 

  Wells Fargo

 

 Question 10In which of the following ways does government affect the consumption component of planned aggregate expenditures?

 

  through net taxes, which change disposable income

 

  by reducing the interest rate to encourage firms to invest

 

  by purchasing goods and services, which increase consumption

 

  by using subsidies to encourage firms to invest

 

 Question 11Which of the following statements is true of open-market operations?

 

  Open-market operations involve the Fed’s purchase and sale of government securities.

 

  Open-market operations involve lending money to member banks.

 

  Open-market operations involve accepting deposits from member banks.

 

  Open-market operations involve clearing checks.

 

 Question 12What activity does the Fed undertake when it carries out open-market operations?

 

  It provides funds so that healthy depository institutions can purchase weaker ones on the open market.

 

  It changes the legal reserve requirements for member banks.

 

  It deals in the purchase and sale of U.S. government securities.

 

  It changes the discount rate, which generally increases the amount of available credit.

 

 Question 13Fiscal policy is likely to fail to correct stagflation in an economy because _____.

 

  it affects both the aggregate demand and supply, but only aggregate supply needs to be changed.

 

  it affects aggregate supply only, but only aggregate demand needs to be changed.

 

  it affects both the aggregate demand and supply, but only aggregate demand needs to be changed.

 

  it affects aggregate demand only, but aggregate supply also needs to changed.

 

 Question 14A money-market mutual fund account is a(n) _____.

 

  savings account against which one can write checks.

 

  checking account that earns interest.

 

  group of stocks sold under one name.

 

  claim on a collection of interest-earning assets that is not guaranteed by the FDIC.

 

 Question 15Fiscal policy focuses on manipulating _____.

 

  both aggregate supply and aggregate demand to smooth out business fluctuations.

 

  aggregate supply to smooth out business fluctuations.

 

  aggregate demand to smooth out business fluctuations.

 

  aggregate demand to stimulate the economy and aggregate supply to contract it.

 

 Question 16Given the desire of politicians to get reelected, they might try in the short run to use _____.

 

  an expansionary monetary policy.

 

  tax increases on high-income households.

 

  a contractionary monetary policy.

 

  an expansionary fiscal policy.

 

 Question 17Which quality best defines money that easily divisible into smaller units?

 

  divisible

 

  portable

 

  durable

 

  uniform quality

 

 Question 18_____ were among the first bankers.

 

  Goldsmiths

 

  Farmers

 

  Savings-and-loan institutions

 

  Governments

 

 Question 19Which of the following is true about classical economists?

 

  They believed the economy would naturally tend toward unemployment.

 

  They advocated laissez-faire policies to promote economic growth.

 

  They believed prices and wages were rigid.

 

  They argued that the sources of depressions and high unemployment lay within the market system.

 

 Question 20The primary purpose of the Federal Open Market Committee (FOMC) is to _____.

 

  distribute Federal Reserve notes.

 

  buy and sell government securities.

 

  extend loans to member banks of the Fed.

 

  set reserve requirements.

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