©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
Econ Test 4 Exam Questions With Correct
Answers
Discretionary fiscal policy refers to - answer✔intentional changes in taxes and government
expenditures made by Congress to stabilize the economy
Countercyclical discretionary fiscal policy calls for - answer✔deficits during recessions and
surpluses during periods of demand-pull inflation
Expansionary fiscal policy is so named because it - answer✔is designed to expand real GDP
Contractionary fiscal policy is so named because it - answer✔is aimed at reducing aggregate
demand and thus achieving price stability
If the MPS in an economy is 0.1 government could shift the aggregate demand curve righward
by 40 billion by - answer✔increasing government spending by 4 billion: Multiplier = 1/1-MPC
or 1/MPS = 1/0.1 = 10 > 40bil/10 = 4 billion
Money functions as - answer✔a store value, a unit of account, and a medium of exchange
If you are estimating your total expenses for school next semester, you are using money
primarily as - answer✔a unit of value
, ©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
purchasing groceries using a debit card best exemplifies money serving as a - answer✔medium
of exchange
In defining money as M1, economists exclude time deposits because - answer✔they are not
directly or immediately a medium of exchange
Which is not a part of the M2 money supply? - answer✔Large denominated time deposits
What corrects for a recession? - answer✔Expansionary fiscal policy
What corrects inflation? - answer✔Contractionary fiscal policy
M1 - answer✔Currency + Checkable deposits
M2 - answer✔M1 + small time deposits
The goldsmith's ability to create money was based on the fact that - answer✔paper money in the
form of gold receipts was rarely redeemed for gold
Most modern bank systems are based on - answer✔Fractional reserves
What are fractional reserves - answer✔The bank will have to pay only a fraction back to the Fed
Which of the following statements is correct?
• The actual reserves of a commercial bank equal its excess reserves minus its required reserves
• a bank's liabilities plus its net worth equal its assets
12/3/2024 11:27AM
Econ Test 4 Exam Questions With Correct
Answers
Discretionary fiscal policy refers to - answer✔intentional changes in taxes and government
expenditures made by Congress to stabilize the economy
Countercyclical discretionary fiscal policy calls for - answer✔deficits during recessions and
surpluses during periods of demand-pull inflation
Expansionary fiscal policy is so named because it - answer✔is designed to expand real GDP
Contractionary fiscal policy is so named because it - answer✔is aimed at reducing aggregate
demand and thus achieving price stability
If the MPS in an economy is 0.1 government could shift the aggregate demand curve righward
by 40 billion by - answer✔increasing government spending by 4 billion: Multiplier = 1/1-MPC
or 1/MPS = 1/0.1 = 10 > 40bil/10 = 4 billion
Money functions as - answer✔a store value, a unit of account, and a medium of exchange
If you are estimating your total expenses for school next semester, you are using money
primarily as - answer✔a unit of value
, ©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
purchasing groceries using a debit card best exemplifies money serving as a - answer✔medium
of exchange
In defining money as M1, economists exclude time deposits because - answer✔they are not
directly or immediately a medium of exchange
Which is not a part of the M2 money supply? - answer✔Large denominated time deposits
What corrects for a recession? - answer✔Expansionary fiscal policy
What corrects inflation? - answer✔Contractionary fiscal policy
M1 - answer✔Currency + Checkable deposits
M2 - answer✔M1 + small time deposits
The goldsmith's ability to create money was based on the fact that - answer✔paper money in the
form of gold receipts was rarely redeemed for gold
Most modern bank systems are based on - answer✔Fractional reserves
What are fractional reserves - answer✔The bank will have to pay only a fraction back to the Fed
Which of the following statements is correct?
• The actual reserves of a commercial bank equal its excess reserves minus its required reserves
• a bank's liabilities plus its net worth equal its assets
