WGU C211 (WGUC211) FINAL EXAM
ELABORATION 2025/2026 | COMPLETE
QUESTIONS AND CORRECT DETAILED
ANSWERS 100% VERIFIED UPDATE
Central bank - ANSWER an institution designed to oversee the banking system
and regulate the quantity of money in the economy
Money supply - ANSWER the quantity of money available in the economy
Monetary policy - ANSWER the setting of the money supply by policymakers
in the central bank
Reserves - ANSWER deposits that banks have received but have not loaned out
Fractional reserve banking - ANSWER a banking system in which banks hold
only a fraction of deposits as reserves
Reserve ratio - ANSWER the fraction of deposits that banks hold as reserves
Money multiplier - ANSWER the amount of money the banking system
generates with each dollar of reserves
, Bank capital - ANSWER the resources a bank's owners have put into the
institution
leverage - ANSWER the use of borrowed money to supplement existing funds
for purposes of investment
leverage ratio - ANSWER the ratio of assets to bank capital
Capital requirement - ANSWER a government regulation specifying a
minimum amount of bank capital
Open-market operations - ANSWER the purchase and sale of US government
bonds by the Fed
Discount rate - ANSWER the interest rate on the loans that the Fed makes to
banks
Reserve requirements - ANSWER regulations on the minimum amount of
reserves that banks must hold against deposits
Federal funds rate - ANSWER the interest rate at which banks make overnight
loans to one another
Theory of liquidity preference - ANSWER Keynes's theory that the interest rate
adjusts to bring money supply and money demand into balance
, fiscal policy - ANSWER the setting of the level of government spending and
taxation by government policymakers
multiplier effect - ANSWER the additional shifts in aggregate demand that
result when expansionary fiscal policy increases income and thereby increases
consumer spending
crowding-out effect - ANSWER the offset in aggregate demand that results
when expansionary fiscal policy raises the interest rate and thereby reduces
investment spending
automatic stabilizers - ANSWER changes in fiscal policy that stimulate
aggregate demand when the economy goes into a recession without policymakers
having to take any deliberate action
Welfare economics - ANSWER the study of how the allocation of resources
affects economic well-being
willingness to pay - ANSWER the maximum amount that a buyer will pay for a
good
Consumption + Investment + Govt. Purchases + Net Exports -
ANSWER Equation for GDP
Civil law - ANSWER Law that uses comprehensive statutes and codes as a
primary means to form legal judgments.
, Common law - ANSWER Law shaped by precedents and traditions from
previous judicial decisions.
Theocratic law - ANSWER A legal system based on religious teachings.
How do civil, common and theocratic laws compare? - ANSWER Relative to
civil law, common law has more flexibility because judges have to resolve specific
disputes based on their interpretation of the law. Civil law has less flexibility
because judges only have the power to apply the law.
Property right - ANSWER The legal rights to use an economic resource and to
derive income and benefits from it. It can be used as collateral for starting a firm; it
is not as common in developing countries, therefore hindering economic growth.
Intellectual property rights - ANSWER Rights associated with the ownership.
They primarily include rights associated with patents, copyrights, and trademarks.
Market economy - ANSWER One that is characterized by the "invisible hand"
of market forces-all factors of production should be privately owned.
Command economy - ANSWER One that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply,
demand, and pricing are planned by the government.
Mixed economy - ANSWER One has elements of both a market economy and a
command economy. It boils down to the relative distribution of market forces
versus command forces.
ELABORATION 2025/2026 | COMPLETE
QUESTIONS AND CORRECT DETAILED
ANSWERS 100% VERIFIED UPDATE
Central bank - ANSWER an institution designed to oversee the banking system
and regulate the quantity of money in the economy
Money supply - ANSWER the quantity of money available in the economy
Monetary policy - ANSWER the setting of the money supply by policymakers
in the central bank
Reserves - ANSWER deposits that banks have received but have not loaned out
Fractional reserve banking - ANSWER a banking system in which banks hold
only a fraction of deposits as reserves
Reserve ratio - ANSWER the fraction of deposits that banks hold as reserves
Money multiplier - ANSWER the amount of money the banking system
generates with each dollar of reserves
, Bank capital - ANSWER the resources a bank's owners have put into the
institution
leverage - ANSWER the use of borrowed money to supplement existing funds
for purposes of investment
leverage ratio - ANSWER the ratio of assets to bank capital
Capital requirement - ANSWER a government regulation specifying a
minimum amount of bank capital
Open-market operations - ANSWER the purchase and sale of US government
bonds by the Fed
Discount rate - ANSWER the interest rate on the loans that the Fed makes to
banks
Reserve requirements - ANSWER regulations on the minimum amount of
reserves that banks must hold against deposits
Federal funds rate - ANSWER the interest rate at which banks make overnight
loans to one another
Theory of liquidity preference - ANSWER Keynes's theory that the interest rate
adjusts to bring money supply and money demand into balance
, fiscal policy - ANSWER the setting of the level of government spending and
taxation by government policymakers
multiplier effect - ANSWER the additional shifts in aggregate demand that
result when expansionary fiscal policy increases income and thereby increases
consumer spending
crowding-out effect - ANSWER the offset in aggregate demand that results
when expansionary fiscal policy raises the interest rate and thereby reduces
investment spending
automatic stabilizers - ANSWER changes in fiscal policy that stimulate
aggregate demand when the economy goes into a recession without policymakers
having to take any deliberate action
Welfare economics - ANSWER the study of how the allocation of resources
affects economic well-being
willingness to pay - ANSWER the maximum amount that a buyer will pay for a
good
Consumption + Investment + Govt. Purchases + Net Exports -
ANSWER Equation for GDP
Civil law - ANSWER Law that uses comprehensive statutes and codes as a
primary means to form legal judgments.
, Common law - ANSWER Law shaped by precedents and traditions from
previous judicial decisions.
Theocratic law - ANSWER A legal system based on religious teachings.
How do civil, common and theocratic laws compare? - ANSWER Relative to
civil law, common law has more flexibility because judges have to resolve specific
disputes based on their interpretation of the law. Civil law has less flexibility
because judges only have the power to apply the law.
Property right - ANSWER The legal rights to use an economic resource and to
derive income and benefits from it. It can be used as collateral for starting a firm; it
is not as common in developing countries, therefore hindering economic growth.
Intellectual property rights - ANSWER Rights associated with the ownership.
They primarily include rights associated with patents, copyrights, and trademarks.
Market economy - ANSWER One that is characterized by the "invisible hand"
of market forces-all factors of production should be privately owned.
Command economy - ANSWER One that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply,
demand, and pricing are planned by the government.
Mixed economy - ANSWER One has elements of both a market economy and a
command economy. It boils down to the relative distribution of market forces
versus command forces.
