Sophia Macroeconomics Milestone 3 -Complete Questions and Answers | GRADED A+

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Sophia Marcoeconomics Milestone 3 1 Which of the following are NOT ways that budget deficits can have a negative effect on future economic growth? When the debt is held domestically. When they a... re financed with foreign-held treasury debt. When interest payments are made to foreigners. When they are financed with an increase in taxes. CONCEPT Economic Growth 2 Using the expenditure approach and the information shown here, which of the following is the calculated GDP? Individual Purchases: $32 billion Government purchases: $200 billion Business investments: $150 billion Imports: $50 billion Exports: $75 billion $532 billion $357 billion $407 billion $382 billion CONCEPT Expenditure and Income Equations 3 Determine which scenario would NOT call for the Fed to intervene. Prices are increasing rapidly; real value of the currency is falling. Prices are decreasing quickly; real value of the currency is rising. The economy is reaching hyperinflation. Annual inflation is around 2%. CONCEPT Goals of Monetary Policy 4 Which of the following is NOT a step in the process of lending federal funds? At the end of the day, deposits and withdrawals influence the reserve level. The FOMC sets a target for the federal funds rate. The Fed gives short term loans to banks to help them meet reserve requirements. Banks with excess reserves loan money for one night to banks who cannot meet the reserve. CONCEPT Federal Funds Market 5 Select the example below that is part of contractionary monetary policy. Policies that reduce interest rates Policies that can reduce excessive inflation Open market purchases of treasury securities Lowering the reserve requirement CONCEPT Expansionary/Contractionary Policy and the Multiplier Effect 6 Select the statement below that is FALSE about the Federal Reserve. It helps banks clear checks from other banks. It lets banks keep some of their reserves at regional branches. It authorizes banks to print money. There are 12 regional banks that are part of the Federal Reserve. CONCEPT U.S. Central Bank: Federal Reserve 7 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? There will be an increase of $75 billion in economic activity. There will be an increase of $100 billion in economic activity. There will be an increase of $400 billion in economic activity. There will be an increase of $133.3 billion throughout the economy. CONCEPT Expansionary Policy 8 Which of the following is an example of the function of money as a unit of account? As the use of gold evolved [Show More]

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