Between 2001 and 2003 the Federal Reserve cut interest ...



[A, 17-18]

To economists money is useful because it serves as a

a) medium of exchange

b) stimulus to the printing industry

c) good memorial to national leaders

d) never wears out

[A, 17-18]

To economists money is useful because it serves as a

a) store of value

b) stimulus to the printing industry

c) good memorial to national leaders

d) never wears out

[B, 17-18]

The aspect of money that allows it to be used at different times so you do not have to use it before it spoils is called the

a) medium of exchange

b) store of value

c) creation of value

d) security of value

[A, 17-18]

The aspect of money that allows us to avoid finding a trading partner for all of our goods (bartering) is called the

a) medium of exchange

b) store of value

c) creation of value

d) security of value

[C, 17-18]

Between 2001 and 2003 the Federal Reserve cut interest rates 12 times. This is an example of

a) discretionary fiscal policy

b) nondiscretionary fiscal policy

c) expansionary monetary policy

d) contractionary monetary policy

[D, 17-18]

Between 1999 and 2000 the Federal Reserve raised interest rates 5 times. This is an example of

a) discretionary fiscal policy

b) nondiscretionary fiscal policy

c) expansionary monetary policy

d) contractionary monetary policy

[D, 35-36]

Which of the following would likely have the greatest effect on the banking system and their ability to loan money

a) a change in the target for the federal funds rate by .25 percentage points

b) a change in the discount rate by .25 percentage points

c) the purchase of $1,000,000 of federal debt

d) a change in the reserve ratio by 5 percentage points

[C, 35-36]

In 2003 the Federal Reserve began to openly discuss deflation. Their comments suggested

a) they were enthusiastic about the possibility

b) they were neutral about whether deflation would be a good thing

c) they knew it was something to watch because of the Japanese experience of the 1990s but did not alter policy significantly to combat it

d) they knew it would be a disaster so they immediately cut the target federal funds rate by 5 percentage points to avoid the possibility

[D, at end]

One limiting factor on the Federal Reserves ability to use monetary policy to stimulate the economy is that

a) the Federal Reserve has no tools at its disposal to lower interest rates

b) the Federal Reserve has tools to lower interest rates but they do not work below the interest rate of 10%

c) the Federal Reserve has tools to lower interest rates but they do not work below the interest rate of 5%

d) the Federal Reserve has tools to lower interest rates but they do not work below the interest rate of 0%

[D, at end]

In 2003 the Federal Reserve had used its policy options to such a degree that

a) interest rates were the highest they had been in 40 years

b) interest rates were driven below zero

c) interest rates were the lowest they had been in 40 years

d) Congress stripped them of this authority

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