Explain your reasoning. Which of the following policies is a component of supply-side fiscal policy? - The Federal Reserve increases the percentage of deposits that commercial banks are required to keep in their vaults, Contractionary (restrictive) monetary policy, Classify the actions described as examples of expansionary monetary policy (intended to stimulate the economy), contractionary or restrictive monetary policy (meant to slow down the economy), or not an example of monetary policy. component of aggregate demand, so this shifts aggregate demand to Which landmark case from the year 1803 established that the Supreme Court had the power of judicial review? Printing more money will affect real GDP only in the short run because all prices do not adjust fully in the short run. American Government module 3 Exam study guide, Module 5 Principles of American Democracy, Christina Dejong, Christopher E. Smith, George F Cole. Chapter 11 - Money and Monetary Policy 4 23. Which agency is charged with protecting and managing national monuments? The Federal Reserve, which maintains reserve banks across the United States, is responsible for monetary policy. - The amount a bank has on hand fulfill the cash demands of its customers and the reserve requirements of the Fed. Become familiar with the notions of "liquidity trap" and "credit rationing." The Securities and Exchange Commission was founded by Franklin Roosevelt during the Great Depression. M1 is the narrowest definition of the money supply. At =.05\alpha=.05=.05, what is your conclusion? - The equilibrium interest rate, What are the results of a contractionary monetary policy, which intends to slow down the economy, and what are not? component of aggregate demand, so this shifts aggregate demand to The __ enables calculation of the maximum amount of money that can be created from a dollar deposited into the banking system. Hence, the policy adopted may be contractionary, expansionary or neutral in nature. Which event is most likely an outcome of research by the Environmental Protection Agency? When the nominal interest rate is rising the real interest rate is necessarily rising: when the nominal interest rate is falling, the real interest rate is necessarily falling. It increases federal spending on infrastructure. Based on orders received and forecasts of future demand, it is estimated that the demand (in units) for the next four seasons is: Fall 10,000; Winter 8000; Spring 7,000; Summer 12,000. What was Nixon's argument for not turning over the Watergate tapes? Which type of agency would be most likely to focus on protecting the nation's borders? Generally speaking contractionary monetary policies and expansionary monetary policies involve changing the level of the money supply in a country. 1. M1 is the narrowest definition of the money supply. The economy's long-run potential, or what economists call full employment. - The Federal Reserve decreases the discount rate Liberalism as a foreign policy perspective dates back only to the 1960s and 1970s; it represents the opposing view to realism. The economy, therefore, cannot be stimulated beyond this point. someone who tries to influence the government in an organized way. How do automatic stabilizers affect the government's budget during an economic recession? This lowers the interest rate, which Which public health and safety agency would be most likely to investigate the safety of a new over-the-counter medicine? Change in interest rate impacts the investment spending. All of the following are examples of fiscal policy to lower unemployment, EXCEPT: Which of the following is a possible negative consequence of decreased taxes and increased government spending? In the long run, the decrease in the money supply will cause the price level in the economy to __________ and real GDP to ___________. - What is the simple money (deposit) multiplier? Increase government spending and decrease taxes. To curb inflation and reduce the money supply,. If the value of the good or service is not included, explain why not. Which of the following would be LEAST likely to occur during an expansionary gap? Which of the following is a tool that the U.S. president can use on his or her own to affect foreign policy? Injecting new money into the economy eventually causes: As the prices of goods and services decrease, the value of money: What did the Federal Reserve do in response to the Great Recession? The total change in the M1 brought about the money multiplier is affected by the amount of deposits made by households and businesses. Which of the following tax codes is most progressive? Holding all else constant, in the short run, a decrease in the money supply can cause: a decrease in real gross domestic product (GDP). According to the U.S. constitution, what role should federal courts play in lawmaking? If in fiscal year 2010, the federal government receives $1,800 billion in revenues and spends $1,550 billion on goods and services, what will happen to the national debt? (Econ) Mod 3 Note Guide.docx - The National Economy and You (Refer to Quizlet Guide Picture #2). M1 is the narrowest definition of the money supply. 2011 0% Which form of foreign aid involves many nations sharing a common goal and jointly contributing to a common fund? Which cabinet level agency oversees the U.S. - The central bank buys bonds from private banks. When actual output exceeds its long-run potential, inflation is the result. Consider the impact of monetary policy over time. High levels of government debt can accrue. Refer to the following figure to answer the questions that follow.According to the figure, if the economy started at full-employment output, expansionary monetary policy would cause real gross domestic product (GDP) to ______________ in the short run. Imagine that your are the writer of a newspaper column in which you answer letters from teens seeking advice. This raises the interest rate, which Spain According to the figure, if the economy started at full-employment output, expansionary monetary policy would cause real gross domestic product (GDP) to ______________ in the short run. Which of the following is an example of contractionary monetary policy Cattle is not an effective form of money. As a result, expected income increases. Contractionary Fiscal Policy: Definition, Purpose, Examples - The Balance 6. Maintain full employment, keep inflation under control, and drive economic growth. - Excess reserves refer to the reserves that the banks have beyond the legally required reserve amounts Which of the following best describes the economic effects of this policy? provides a larger incentive for firms to invest. Open market operations, discount rate, and the reserve requirement. (Refer to Quizlet Guide Picture #1), What are Bank Uno's deposits in Table 2? Which of the following statements is TRUE of expansionary monetary policy during a recession? Which issue is typically addressed by federal public policies? - Raises the interest rate E. Money is not the only possible store of . - the long-term stability of Switzerland's economy, Suppose a wealthy family decides to move $50 million from their Swiss bank account to their Bank of America account. demandaggregate supply model? Assume of 8% reserve requirement in the U.S. and no money leakages: Which program or agency accounts for the greatest amount of discretionary spending by the United States federal government? Explain how monetary policy is expected to affect investment and aggregate expenditure. The Federal Reserve generally uses ___________________ to implement monetary policy. Which phrase best describes the economy of the former Soviet Union and present-day North Korea? Banks must lend out all their excess reserves in order to change the M1 money supply. If expansionary fiscal policy is necessary, what changes should the government make to spending or taxes? It involves spurring or slowing economic activity using taxes and government spending. State laws. In this equation, M is the supply of money, V is the velocity of money, P is the price level, and Q is real output. Which of the following statements best describes the use of fiscal policy during a recession? Expert Answer. The Fed can _____________ the money supply by lowering this rate. Which of the following ensures the right of workers to seek safety and health on the job without fear of punishment? The actual level of aggregate demand is less than the full employment level of output. Which statement best describes contractionary monetary policy? Suppose that you are employed as an advisor to the central bank. The Federal Reserve was created by the Federal Reserve Act of 1913. Classify each of the variables listed by the policy's short run effect upon them. some ways they avoid or reduce each Expansionary monetary policy directly puts money into the loanable funds market. - Some loan recipients choose to hold some cash instead of depositing all of it in banks. investing. Which statement best describes monetary policy. Suppose a wealthy family decides to move $50 million from their Swiss bank account to their Bank of America account. What does the word 'fiscal' refer to when discussing fiscal policy? Explain briefly. MODULE 3 GOVERNMENT Flashcards | Quizlet What measurement focus is used in government-wide financial statements? This lowers the interest rate, which What are Contractionary monetary policy is the opposite of expansionary monetary policy. How will real GDP and the price level be affected? - Increases investment spending Which goal of foreign policy in included in all the other goals? It offered tuition-free education, help with household expenses, and loans for starting new businesses. large quantities of counterfeit banknotes could decrease the value of Australian money, Suppose that a central bank pursues expansionary monetary policy by purchasing bonds. A company has been running an assembly line with 97.42%%97.42 \% \%97.42%% of the products made is acceptable. Select the proper policy recommendation or economic prediction for each of the following scenarios. Select the proper policy recommendation or economic prediction for each of the following scenarios. Investment is a component of aggregate demand, so this shifts aggregate demand to the right. bailout. - Increases consumer spending Which one of the following statements is correct? component of. What specific group takes responsibility for the actions? Q. refers to government revenue, spending, and debt. The gov. A. Government Module 3 Flashcards | Quizlet John Maynard Keynes believed that fiscal policy designed to deal with budgets should _____. D. When the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate. 1. changing the tax rates, to raise more tax money. However, everyone in the economy expects that exactly this amount (in present value) will have to be paid back in the future in the form of taxes. What is the first step toward becoming a U.S. Supreme Court judge, according to Article III of the Constitution? the money multiplier for the U.S. in this ex. Expansionary monetary policy that is destabilizing Expansionary monetary policy that . A typical estimate of the sacrifice ratio is 5. C. Money is always the best possible store of value. Data on GDP is release quarterly, meaning that an economic downturn beginning in January may not be identified until more than three months later. government spending, taxes, and transfer payments; aggregate demand. It takes time to collect data and many economic reports are not totally current. Which step in the rule-making process makes the new regulations available to the public for review? Bill, provided financial assistance to soldiers returning from World War II. We've recently seen cases in which central banks have even opted for negative rates. A portion of the data is shown. If things arent going wellunemployment is high growth is lowthen more money flowing around the economy makes it easier for people to get . The interest rate that the Federal Reserve Bank (Fed) charges member banks for loans is knowns as the _______________. Which of the following shows the affect of the monetary policy? . When the economy is growing too slowly (recession) or too quickly (high inflation), the two approaches the government can use, according to economists, include which of the following? President Lyndon B. Johnson created a set of programs that were known as the Great Society. A recent example of expansionary monetary policy was seen in the U.S. in the late 2000s during the Great Recession. Expansionary Monetary Policy: Definition, Effects, Examples provides a larger incentive for firms to invest. Consider the impact of monetary policy over time. Investment is a component of aggregate demand, so this shifts aggregate demand to the left. According to Keynesian economists, if policymakers thought the economy was headed into a recession, what action would be most appropriate? Monetary policy is under the control of this agency. TO increase money supply, we will buy gov. In 2013, (1) _______ suffered from an unemployment rate of 25% and huge amounts of debt. Inventory at the beginning of Fall is 660 units. a target rate of annual inflation is maintained by expanding or contracting the money supply. True or False: True or False: Banks in Ruritania have a required reserve ratio of 5%. - Provides info. It is typically implemented by a central bank or a monetary authority to control the money supply and maintain price stability. The Treasury Department oversees the IRS, one of the most controversial of all government agencies. a. Calc. According to the permanent income hypothesis, which situations would result in an immediate increase in consumer spending, which would result in an immediate decrease in consumer spending, and which would result in no change in consumer spending? True or False: Which of the following best describes how contractionary monetary policy affects the aggregate demand curve in the aggregate demand-aggregate supply model? I know you will do great on your test. Where do the bills that are introduced to Congress originate? 120 seconds. securities. Government _regulation_ helps prevent periods of extreme _waves of growth__ and __declines_____. What system is applied to calculate the timing of revenue and expense recognition? Contractionary Monetary Policy: Definition, Purpose, Examples Refer to the following figure to answer the questions that follow. Suppose the President plans to cut taxes for consumers and also plans to increase defense spending. How do automatic stabilizers benefit the economy? d. The General Duty Clause. Among the roles that money serves in an economy, money is considered a unit of account. Which of the following can change relatively quickly in the short run? a. Elastic. What is an example of an item that would fall under mandatory spending? Investment is a Econs 1.5 Test | Professional Development - Quizizz (Refer to Quizlet Guide Picture #1), What are the bank's deposits in Table 2? Suppose that you are employed as an advisor to the central bank. Ans. - Oversees the buying and selling of gov. The purpose of contractionary fiscal policy is to slow growth to a healthy economic level.