Describe a monetary policy


Question 1. Which of these are a role for money?

  • double coincidence of wants
  • portable
  • law of demand
  • barter

Question 2 Money is stable when

  • its purchasing power does not vary over time,
  • it is portable,
  • it can be divided into smaller units, like change.
  • it is widely accepted for payment.

Question 3 The U.S. dollar is an example of

  • inconvertible fiat money
  • the gold standard
  • barter exchange
  • commodity money

Question 4 Which of these is NOT a function of banks:

  • they bring together savers and borrowers.
  • they are responsible for the conduct of monetary policy
  • safe places for people to store their wealth
  • they help to facilitate trade by providing alternative methods of payment

Question 5 Supply side economics

  • espouses that tax cuts will increase aggregate demand and stimulate economic growth
  • espouses that tax cuts will increase aggregate supply and stimulate economic growth
  • is generally accepted by mainstream economists
  • has proven to be effective in stimulating the U.S. economy

Question 6 Which of the following is NOT true of inflation

  • it is affected by the growth of the money supply
  • it describes both increases in prices and decreases in prices
  • it is commonly measured by the CPI - the Consumer Price Index
  • it describes an increase in the over-all level of prices of goods and services

Question 7 The CPI measures

  • measures the prices of all goods purchased by individuals and non-profit institutions
  • the average cost of the goods and services purchased by consumers
  • the average cost of goods and services purchased by individuals and firms
  • the average price of food and fuel, the most volatilely-priced purchased goods

Question 8 Which of the following describes a monetary policy?

  • government issuance of U.S. securities
  • increase in tax rates
  • infrastructure spending
  • federal open market operation

Question 9 Which of these are causes of the Great Recession?

  • federal government tax cuts
  • weak banking regulation combined with rampant financial innovation
  • excessive banking regulation combined with rampant banking innovations
  • large federal deficit

Question 10 Which of the following describes an expansionary monetary policy? (Please select all correct answers)

  • A decrease in the reserve ratio
  • FOMC directive to purchase securities
  • FOMC directive to sell securities
  • Increase in the overnight federal funds rate

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Macroeconomics: Describe a monetary policy
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