Sophia (Macroeconomics) - Unit 3 Milestone with complete solution

Sophia (Macroeconomics) - Unit 3 Milestone with complete solution Which statement below regarding monetary policy is false? Correct answer- Central banks aim for an inflation rate of 5%. What does the expression Y-(C+T) represent? Correct answer- Public savings If the MPC is 0.75 and the government increases spending by $100 billion, the effect this change has on the economy will be which of the following? Correct answer- There will be an increase of $400 billion in economic activity. Which of the following is NOT a way that the government finances fiscal policy? Correct answer- Printing money Which of the following is NOT a way that the Fed prevents runs from happening? Correct answer- Private banks rely on the Federal Government's oversight of the Federal Reserve's monetary policies. What happens during a bank run? Correct answer- Many depositors demand their funds to be repaid. Which of the following is an example of contractionary monetary policy? Correct answer- Open market sale of treasury securities Which of the following makes the Federal Reserve different from central banks in other countries? Correct answer- The Federal Reserve is not directly controlled by the federal government. If the reserve requirement for a bank is 25%, $15 in M0 will lead to which of the following amounts of money for M1? Correct answer- $60 The discount rate is charged to Correct answer- member banks for short term loans from the Fed Which of the following is an example of deflation? Correct answer- Someone owes more on a house than it is worth. Which statement below corresponds to the term "central bank?"