Economics Questions

A special checking account would be preferred if you bro only a few checks every month

Careful recordkeeping can be a disadvantage of having a checking account

A checking account provides greater temptation to spend money than cash does

the value of the next best alternative given up to acquire the good.

In practice, the Fed's policy of targeting ________ in the 1960s proved to be ________, destabilizing the economy.A) money market conditions; countercyclicalB) money market conditions; procyclicalC) monetary aggregates; countercyclicalD) monetary aggregates; procyclical

The goal for high employment should be a level of unemployment at which the demand for labor equals the supply of labor. Economists call this level of unemployment theA) frictional level of unemployment.B) structural level of unemployment.C) natural rate level of unemployment.D) Keynesian rate level of unemployment.

High unemployment is undesirable because itA) results in a loss of output.B) always increases inflation.C) always increases interest rates.D) reduces idle resources.

High inflation can spiral out of control whenA) expected inflation increases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation.B) expected inflation decreases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation.C) expected inflation increases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation.D) expected inflation decreases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation.

In practice, the Fed's policy of targeting money market conditions in the 1960s proved to beA) countercyclical, helping to stabilize the economy.B) procyclical, destabilizing the economy.C) procyclical, helping to stabilize the economy.D) countercyclical, destabilizing the economy.

When workers voluntarily leave work while they look for better jobs, the resulting unemployment is calledA) structural unemployment.B) frictional unemployment.C) cyclical unemployment.D) underemployment.

Targeting interest rates can be procyclical becauseA) an increase in income increases interest rates, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.B) an increase in interest rates increases income, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.C) an increase in the monetary base increases the money supply, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.D) an increase in income increases the monetary base and money supply, causing the Fed to buy bonds to increase interest rates and income.

Although the Fed professed employment of a monetary aggregate targeting strategy during the 1970s, its behavior suggests that it emphasizedA) free-reserve targeting.B) interest-rate targeting.C) a real-bills doctrine.D) price-index targeting.

The Fed accidentally discovered open market operations whenA) it came to the rescue of failing banks in the early 1930s, and found that its purchases of bank loans injected reserves into the banking system.B) it purchased securities for income following the 1920-1921 recession.C) it attempted to slow inflation in 1919 by selling securities and found that its sales drained reserves from the banking system.D) it reinterpreted a key provision of the Federal Reserve Act.

During World War II, whenever interest rates would rise and the price of bonds would begin to fall, the Fed wouldA) lower reserve requirements.B) raise reserve requirements.C) make open market purchases of government securities.D) make open market sales of government securities.

The Fed's use of the federal funds rate as an operating target in the 1970s resulted inA) countercyclical monetary policy.B) too slow growth in M1 throughout the decade.C) procyclical monetary policy.D) too rapid growth in M1 throughout the decade.

During the 1950s, the Fed targetedA) M1.B) M2.C) the monetary base.D) money market conditions.

Although the Fed professed employment of ________ targeting during the 1970s, its behavior suggests that it emphasized ________ targeting.A) free-reserve; interest-rateB) interest-rate; monetary aggregateC) monetary aggregate; interest-rateD) free reserve; monetary aggregate

Unemployment resulting from a mismatch of workers' skills and job requirements is calledA) frictional unemployment.B) structural unemployment.C) seasonal unemployment.D) cyclical unemployment.

The Fed was committed to keeping interest rates low to assist Treasury financing of budget deficitsA) only during World War I.B) during the Great Depression.C) during World War I and World War II.D) throughout the entire existence of the Fed.

The Fed accidentally discovered open market operations in the earlyA) 1920s.B) 1910s.C) 1900s.D) 1890s.