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Upgrade to remove ads. During the early years of the Reagan administration, some of the Reagan advisors argued that tax cuts could reduce inflation because they would give people an incentive to produce more.

This argument implies that tax cuts move the: Critics of this argument believed that tax cuts would increase inflation, not reduce it. The critics were arguing that tax cuts move the: The budget surplus that developed during the late s: Unexpected large increases in income in the late s: Because the terrorist attack of September 11th reduced consumption and investment, it: The target rate of unemployment is: If a country's exchange rate increases, its expenditures function will: Graphically, the equilibrium level of real income occurs where the expenditures function intersects the: Between andthe U.

How Money is Destroyed - Positive Money

The rise in the savings rate would be expected to: The reason the multiplier is greater than 1 is that: Suppose the economy is initially in equilibrium but then withdrawals from the circular flow rise relative to injections.

Assuming no other changes occur: Suppose the Japanese economy faces a recessionary gap of If the mpe is 0. The required reserve ratio refers to the ratio of a bank's: Based on this information, the required reserve ratio is: This increase is most likely to: When a bank makes a loan, the money supply: If the reserve ratio is 0.

The interest rate of the economy was also 5 percent. Today you read in the newspaper that the interest rate in the economy decreased to 3 percent. You are holding a bond that is: If the Fed increases the required reserves, financial institutions will likely lend out: The discount rate is the interest rate: When the Fed lowered the discount rate in late the action was ultimately designed to: Suppose the money multiplier in the U.

How Banks Create Money - Positive Money

If the Fed wants to reduce the money supply by 1, it should: The interest rate banks charge each other to borrow excess reserves is called the: If the actual Federal funds online scientific calculator casio fx is 9 percent and the Fed's target Federal funds rate is 8 percent, the Fed is most likely to adopt which of the following policies?

A reduction in the reserve requirement. During the s, Japan experienced a how much money does julie chen make on big brother price level, or deflation. Assuming that the deflation was unexpected, when a bank makes a loan what happens to the money supply benefited: The short-run aggregate supply curve will shift up if: During the Great Depression of the s, the U.

Partly as a consequence of this, nearly half the banks in the U. Deflation svt 40 aftermarket parts to bank failures by: According to the quantity theory of money, if the money supply increases by 12 percent, then in the long run prices go: The velocity of money is: According to the quantity theory of money, velocity: The quantity theory of money concludes that if real output is constant: Economists who believe in the quantity theory of money argue that: If the growth rate of real GDP is 3 percent and the growth rate of the money supply is 5 percent, an advocate of the quantity theory of money would predict a: Cost-push inflation occurs when: Demand-pull inflation is most consistent with: Money supply increases lead to excess demand and price increases.

The short-run Phillips curve is: The short-run Phillips curve suggests that an increase in the rate of inflation will accompany: Stagflation is the combination of: In the early s, inflation in the U.

These changes can be represented by a movement along: In terms of the AS-AD model, a supply shock caused by an interruption of oil supplies would: Economists generally agree that when current output is well above potential output there will be: In the short-run framework, budget deficits should: When the government runs a deficit, it will: Deficits and surpluses are best viewed as: Deficits may be desirable in the short run if they: This is most likely the result of: An unanticipated increase in the inflation rate will most likely: Government debt is defined as: If the national debt increases in any given year, it follows that the government: If the federal government has a budget surplus in a given year, the national debt will: Debt is measured relative to GDP because: Which of the following is a reason why government debt is different from individual debt?

Government can create money to finance its debt. Paying interest on internal government debt involves a: External government debt is: In what way is government debt like individual debt? Inflation reduces the real value of both types of debt. Which of the following factors turned the budget surplus into a deficit in ?

Intaxes were cut significantly.

Macro Notes 2: The Money Supply

Interest rates on government bonds are relatively low because: The financial crisis of led to massive federal spending in an effort to stimulate the economy. The combination of the new federal spending and the automatic stabilizers led to. When the baby boomers retire, and if worker productivity does not change, aggregate supply will: