Download Quiz 9

Quiz 9, Econ 203
20 Points Possible
Dr. Strow, Spring 2008
Name
(2) 1. Which of the following is true according to The Economist?
a. The US federal government can end the financial crisis in the US by adding
layers of new regulations on financial institutions
b. An expected increase in state and local government spending will help keep the
US economy our of recession
c. Barbados has joined Venezuela and Cuba in “The Bolivian Alternative”
d. Most homeowners in mixed income public housing developments are people
who were displaced originally be removing existing public housing
e. Taller people, on average make higher incomes than shorter people
(2) 2. What is the proper monetary policy to use to bring the economy out of a
recessionary gap?
a. the fed should buy bonds
b. the fed should sell bonds
(2) 3. If the Federal Reserve buys bonds,
a. the money supply will increase
b. the money supply will decrease
c. the money supply won’t change
(2) 4. How many members does the Board of Governors have?
a. 5
b. 7
c. 12
d. 19
(2) 5. The Federal Reserve
a. is completely independent of the political process
b. is completely dependent on the political process
c. is mostly dependent on the political process as Congress gets to vote on
monetary policy
d. is mostly independent of the political process, but it does have political
appointees who help make policy decisions
(4) 6. Supply the term:
This is the interest rate that banks charge each other to
borrow money over night (the name, not the number)
This is the last name of the current chairman of the FOMC
(6) 7. Suppose current GDP is $8,800 and FEGDP is $5,800 what should the fed do if
we know the following:
-
the mpc = .75
the reserve requirement is .05
a $100 change in the money supply will change interest rates by 1%
a 1% change in interest rates will change investment by $250
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