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devry econ 312 all quizes midterm all assignment not include weeek 8 and discussions

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Question;(TCO 1) The general concern of economics is with the study of theStudent Answer: degree of competition in stock and bond markets in the economy.efficient use of limited productive resources to satisfy economic wants.issue of equality in the distribution of income and wealth among households.budget deficits in the domestic economy and trade deficits in the international economy.Question 2. Question:(TCO 1) The term scarcity in economics refers to the fact thateconomic wants are limited and resources are abused.even in the richest country some people go hungry.no country can produce enough products to satisfy everybody's economic wants.it is impossible to produce too much of any particular good or service in a market economy.Question 3. Question:(TCO 1) Are the goods that businesses offer for "free" to consumers also free to society?Yes, because the individual consumer does not have to pay for them.Yes, because the marginal benefit is greater than the marginal cost.No, because scarce resources were used to produce the free goods.No, because society does not assign a value to free goods.:Question 4. Question:(TCO 1) Which is considered to be an economic resource by economists?RentMoneyLaborWagesQuestion 5. Question:(TCO 1) If an economy is producing at a point inside a production possibilities curve, thenthe economy is efficient.there is economic growth.resources are unemployed.resources are fully employed.Question 6. Question:(TCO 1) Which would not be characteristic of a capitalist economy?Government ownership of the factors of productionCompetition and unrestricted marketsReliance on the market systemFree enterprise and choice:Question 7. Question:(TCO 1) The term dollar votes meansinflation will occur if consumers don't spend wisely.voters may be offered dollars to help elect certain political candidates.government is responsible for determining what will be considered legal tender.consumers "vote" for certain products to be produced by how they spend their incomes.:Question 8. Question:(TCO 1) The circular flow modelassumes that central planning is taking place.illustrates how natural resources are created.illustrates how money is created by the banking system.illustrates the interdependence of businesses and consumers.Question 9. Question:(TCO 1) In a market system, well-defined property rights are important because theyreduce unnecessary investment.limit destructive economic growth.create economic problems.encourage economic activity.:Question 10. Question:(TCO 1) Which is necessary to make a trade in a barter economy?MoneyUnlimited wantsA medium of exchangeA coincidence of wants:Question 11. Question:(TCO 1) Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. What is the opportunity cost of Tammie?s trip to the concert? Show your calculationsQuestion 12. Question:(TCO 1) Identify some intrinsic qualities of capitalist and command economic systems. Identify two countries that practice each.(TCO 6) Fiscal policy refers to themanipulation of government spending and taxes to stabilize domestic output, employment, and the price level.manipulation of government spending and taxes to achieve greater equality in the distribution of income.altering of the interest rate to change aggregate demand.fact that equal increases in government spending and taxation will be contractionary.:Question 2. Question:(TCO 6) Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth?A Congressional proposal to incur a Federal surplus to be used for the retirement of public debt.Reductions in agricultural subsidies and veterans' benefits.Postponement of a highway construction program.Reductions in Federal tax rates on personal and corporate income.:Question 3. Question:(TCO 6) The crowding-out effect of expansionary fiscal policy suggests thatgovernment spending increases at the expense of private investment.imports replace domestic production.private investment increases at the expense of government spending.saving increases at the expense of investment.:Question 4. Question:(TCO 5) Which of the following would not shift the aggregate supply curve?An increase in labor productivityA decline in the price of imported oilA decline in business taxesAn increase in the price levelQuestion 5. Question:(TCO 6) Other things equal, a reduction in personal and business taxes can be expected to: increase aggregate demand and decrease aggregate supply.increase both aggregate demand and aggregate supply.decrease both aggregate demand and aggregate supply.decrease aggregate demand and increase aggregate supply.Question 6. Question:(TCO 6) The MPC can be defined as that fraction of achange in income that is not spent.change in income that is spent.given total income that is not consumed.given total income that is consumed.:Question 7. Question:(TCO 6) Dissaving meansthe same thing as disinvesting.that households are spending more than their current incomes.that saving and investment are equal.that disposable income is less than zero.Question 8. Question:(TCO 5) Refer to the graph. Which of the following factors will shift AD1 to AD3?Graph DescriptionAn increase in expected returns on investmentAn increase in productivityA decrease in real interest ratesA decrease in consumer wealth:Question 9. Question:(TCO 6) The multiplier is1/MPC.1/(1 + MPC).1/MPS.1/(1 - MPS).Question 10. Question:(TCO 5) The American Recovery and Reinvestment Act of 2009 was implemented primarily toreduce inflationary pressure caused by oil price increases.curb the overspending by households that contributed to the Great Recession.bring the Federal budget back into balance.stimulate aggregate demand and employment.Question 11. Question:(TCO 5) What effect would each of the following have on aggregate demand or aggregatesupply? Explain.a. A decrease in real interest rates paid by the consumerb. An increase in Labor Productivity as a result of a better-educated populationQuestion 12. Question:(TCO 6) Why do some economists believe that tax c(TCO 2) Economists use the term "demand" to refer toa particular price-quantity combination on a stable demand curve.the total amount spent on a particular commodity over a stipulated time period.an upsloping line on a graph that relates consumer purchases and product price.a schedule of various combinations of market prices and quantities-demanded.: 1 of 1Comments:Question 2. Question:(TCO 2) Which of the following would not shift the demand curve for beef?A widely publicized study that indicates beef increases one's cholesterolA reduction in the price of cattle feedAn effective advertising campaign by pork producersA change in the incomes of beef consumersQuestion 3. Question:(TCO 2) Which of the following is most likely to be an inferior good?Fur coatsOcean cruisesUsed clothingSteakInstructor Explanation: Chapter 3.Points Received: 1 of 1Comments:Question 4. Question:(TCO 2) Which of the following would mostly likely increase the demand for gasoline?The expectation by consumers that gasoline prices will be higher in the futureThe expectation by consumers that gasoline prices will be lower in the futureA widespread shift in car ownership from SUVs to hybrid sedansA decrease in the price of public transportationQuestion 5. Question:(TCO 2) The supply curve shows the relationship betweenprice and quantity supplied.production costs and the amount demanded.total business revenues and quantity supplied.physical inputs of resources and the resulting units of output.Question 6. Question:(TCO 2) The price elasticity of demand is generallynegative, but the minus sign is ignored.positive, but the plus sign is ignored.positive for normal goods and negative for inferior goods.positive because price and quantity demanded are inversely related.Question 7. Question:(TCO 2) Suppose the price* of local cable TV service increased from $16.20 to $19.80, and as a result, the number of cable subscribers decreased from 224,000 to 176,000. Use the Midpoint formula to find the answer. Along this portion of the demand curve, price elasticity of demand is0.81.21.68.0Question 8. Question:(TCO 2) A firm can sell as much as it wants at a constant price. Demand is thusperfectly inelastic.perfectly elastic.relatively inelastic.relatively elastic.Question 9. Question:(TCO 2) The demand schedules for such products as eggs, bread, and electricity tend to beperfectly price elastic.of unit price elasticity.relatively price inelastic.relatively price elastic.Question 10. Question:(TCO 2) The demand for autos is likely to beless price elastic than the demand for Honda Accords.more price elastic than the demand for Honda Accords.of the same price elasticity as the demand for Honda Accords.perfectly inelastic.Question 11. Question:(TCO 2) What is the Law of Supply? Why does the supply curve slope upwards?Question 12. Question:(TCO 2) Suppose the price of widgets falls from $7 to $5 and consumption of widgets rises from 15 widgets a month to 25 widgets. Calculate your price elasticity of demand of widgets. What can you say about your price elasticity of demand of widgets? Is it Elastic, Inelastic, or Unitary Elastic? Why? Use the Midpoint formula and please show your work.(TCO 3) Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?Payments of wages to its office workersRent paid for the use of equipment owned by the Schultz Machinery CompanyUse of savings to pay operating expenses instead of generating interest incomeEconomic profits resulting from current productionQuestion 2. Question:(TCO 3) To economists, the main difference between the short run and the long run is thatthe law of diminishing returns applies in the long run, but not in the short run.in the long run all resources are variable, while in the short run at least one resource is fixed.fixed costs are more important to decision making in the long run than they are in the short run.in the short run all resources are fixed, while in the long run all resources are variable.Question 3. Question:(TCO 3) Which of the following industries most closely approximates pure competition?AgricultureFarm implementsClothingSteelQuestion 4. Question:(TCO 3) Which of the following statements applies to a purely competitive producer?It will not advertise its product.In long-run equilibrium it will earn an economic profit.Its product will have a brand name.Its product is slightly different from those of its competitors.Question 5. Question:(TCO 3) Which of the following is correct?Both purely competitive and monopolistic firms are "price takers."Both purely competitive and monopolistic firms are "price makers."A purely competitive firm is a "price taker," while a monopolist is a "price maker."A purely competitive firm is a "price maker," while a monopolist is a "price taker."Question 6. Question:(TCO 3) Barriers to entering an industryencourage allocative efficiency.encourage productive efficiency.are the basis for monopoly.apply only to purely monopolistic industries.Question 7. Question:(TCO 3) The restaurant, legal assistance, and clothing industries are each illustrations ofcountervailing power.homogeneous oligopoly.monopolistic competition.pure monopoly.Question 8. Question:(TCO 3) Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a monopolistic competitor?Subway SandwichesPittsburgh Plate GlassFord Motor CompanyMicrosoftQuestion 9. Question:(TCO 3) Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a differentiated oligopolist in a highly concentrated industry?Subway SandwichesUS SteelFord Motor CompanyAlcoa Aluminum:(TCO 3) If the four-firm concentration ratio for industry X is 80the four largest firms account for 80% of total sales.each of the four largest firms accounts for 20% of total sales.the four largest firms account for 20% of total sales.the industry is monopolistically competitive.:Question 11. Question:(TCO 3) What is the LAW OF DIMINISHING RETURNS, and why is this law considered a short-run phenomenon?Question 12. Question:(TCO 3) Identify the primary characteristics of monopolistic competition and oligopoly. Give examples of each.(TCO 1) As a consequence of the condition of scarcitythere is never enough of anything.production has to be centrally planned.things which are plentiful have relatively high prices.individuals and communities have to make choices from among alternatives.Question 2. Question:(TCO 1) The opportunity cost of constructing a new public highway is themoney cost of hiring contractors and construction workers for the new highway.value of other goods and services that must be sacrificed to construct the new highway.expected cost of constructing the new highway in a future year.value of shorter driving times and distances when the new highway is completed.Question 3. Question:(TCO 1) A nation can increase its production possibilities byshifting resources from investment good production to consumer good production.shifting resources from private goods to public goods.improving labor productivity.eliminating discrimination.:Question 4. Question:(TCO 1) Which expression is another way of saying "marginal benefit"?Benefits given upUnintended gainEmployment benefitsExtra benefitQuestion 5. Question:(TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called themanager.entrepreneur.stockbroker.banker.Question 6. Question:(TCO 1) The Soviet Union economy of the 1980s would best be classified asa market system.pure capitalism.laissez-faire capitalism.a command system.Question 7. Question: The simple circular-flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services throughproduct markets.resource markets.employment agencies.business firms.Question 8. Question:(TCO 1) Consumers express self-interest when theyseek the lowest price for a product.reduce business losses.collect economic profits.search for jobs with the highest wages.Question 9. Question:(TCO 1) Which is not one of the five fundamental questions that an economy must deal with?How will the goods and services be produced?Why should the goods and services be produced?Who is to receive the goods and services produced in the economy?In what ways will progress be promoted?Question 10. Question:(TCO 1) The major "success indicator" for business managers in command economies like the Soviet Union and China in the past wasthe quantity of output.product quality.the amount of profits.worker morale.Question 11. Question:(TCO 2) An increase in demand means thatgiven supply, the price of the product will decline.the demand curve has shifted to the right.price has declined and consumers therefore want to purchase more of the product.the demand curve has shifted to the left.Question 12. Question:(TCO 2) At the point where the demand and supply curves intersectthe buying and selling decisions of consumers and producers are inconsistent with one another.the market is in disequilibrium.there is neither a surplus nor a shortage of the product.quantity demanded exceeds quantity supplied.Question 13. Question:(TCO 2) Black markets are associated withprice floors and the resulting product surpluses.price floors and the resulting product shortages.price ceilings and the resulting product shortages.price ceilings and the resulting product surpluses.:Question 14. Question:(TCO 2) An increase in demand for oil along with a simultaneous increase in supply of oil willdecrease price and increase quantity.increase price and decrease quantity.increase quantity, but whether it increases price depends on how much each curve shifts.increase price, but whether it increases quantity depends on how much each curve shifts.Question 15. Question:(TCO 2) If Product Y is an inferior good, a decrease in consumer incomes willmake buyers want to buy less of Product Y.not affect the sales of Product Y.shift the demand curve for Product Y to the left.shift the demand curve for Product Y to the right.Question 16. Question:(TCO 2) If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by20 percent.0.5 percent.5 percent.Question 17. Question:(TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good iselastic.inelastic.unitary elastic.perfectly elastic.Question 18. Question:(TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues, you should:increase the price of the software.decrease the price of the software.hold the price of the software constant.increase the supply of the software.Question 19. Question:(TCO 2) A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand isunity.elastic.inelastic.perfectly elastic.Question 20. Question:(TCO 2) When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available, they are assuming that students who pay full tuition: have elastic demand and students who use financial aid have inelastic demand.have inelastic demand and students who use financial aid have elastic demand.view a college education as an inferior good and students who use financial aid view it as a normal good.view a college education as a normal good and students who use financial aid view it as an inferior good.Question 21. Question:(TCO 3) Suppose that you could prepare your own tax return in 15 hours, or you could hire a tax specialist to prepare it for you in two hours. You value your time at $11 an hour. The tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is$40.$55.$110.$165.Question 22. Question:(TCO 3) Economic profits are equal tototal revenues minus fixed costs.total revenues minus the costs of raw materials.total revenues minus the opportunity costs of all inputs.gross profit minus selling and operating expenses.Question 23. Question:(TCO 3) The main difference between the short run and the long run is thatfirms earn zero profits in the long run.the long run always refers to a time period of one year or longer.in the short run, some inputs are fixed.in the long run, all inputs are fixed.Question 24. Question:(TCO 3) The law of diminishing returns only applies in cases wherethere is increasing scarcity of factors of production.the price of extra units of a factor is increasing.there is at least one fixed factor of production.capital is a variable input.Question 25. Question:(TCO 3) Marginal cost can be defined as thechange in total fixed cost resulting from one more unit of production.change in total variable cost resulting from one more unit of production.change in average total cost resulting from one more unit of production.change in average variable cost resulting from one more unit of production.Question 26. Question:(TCO 3) If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?None, because fixed costs do not affect marginal cost.Marginal cost would increase by 50 percent.Marginal cost would increase by less than 50 percent.Marginal cost would increase by more than 50 percent.Question: Antitrust Practices and Market PowerResearch authoritative articles using the news and the DeVry Online Library (http://library.devry.edu) for a recent case of antitrust investigation. You are free to choose a case from any industry and any part of the world. Based on the case you have selected, answer the following questions.Why was/were the firm(s) investigated for antitrust behavior?Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.Based on your findings to the questions listed above, write a report with a minimum of 300 words in essay format in APA style (use the APA template in Doc Sharing), using correct economic terms covered in the discussions. If you ONLY write 300 words, you probably won?t be able to fully answer the questions.Key concepts to include in your paper include the following.Monopoly Market StructureOligopoly Market StructureBarriers to Entry Into the MarketNatural MonopolyGovernment MonopolyDownward Sloping Demand CurveEconomies of ScalePrice FixingCollusionMonopoly PricingPrice MakerMarket PowerEconomic ProfitsImperfect CompetitionRent-Seeking BehaviorX-InefficiencyDeadweight Loss to SocietyMarginal CostMarginal RevenueAntitrustYou must use at minimum at least one article from the DeVry Online Library. Note: Although your textbook is a good source of knowledge, it is NOT an article and cannot be the only sourcefor the assignment. Cite all your references in APA format. You can use the Citations & Bibliography function of Microsoft Word, which is found under the References tab.:(TCO 6) Fiscal policy refers to themanipulation of government spending and taxes to stabilize domestic output, employment, and the price level.manipulation of government spending and taxes to achieve greater equality in the distribution of income.altering of the interest rate to change aggregate demand.fact that equal increases in government spending and taxation will be contractionary.:Question 2. Question:(TCO 6) Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth?A Congressional proposal to incur a Federal surplus to be used for the retirement of public debt.Reductions in agricultural subsidies and veterans' benefits.Postponement of a highway construction program.Reductions in Federal tax rates on personal and corporate income.:Question 3. Question:(TCO 6) The crowding-out effect of expansionary fiscal policy suggests thatgovernment spending increases at the expense of private investment.imports replace domestic production.private investment increases at the expense of government spending.saving increases at the expense of investment.:Question 4. Question:(TCO 5) Which of the following would not shift the aggregate supply curve?An increase in labor productivityA decline in the price of imported oilA decline in business taxesAn increase in the price levelQuestion 5. Question:(TCO 6) Other things equal, a reduction in personal and business taxes can be expected to: increase aggregate demand and decrease aggregate supply.increase both aggregate demand and aggregate supply.decrease both aggregate demand and aggregate supply.decrease aggregate demand and increase aggregate supply.Question 6. Question:(TCO 6) The MPC can be defined as that fraction of achange in income that is not spent.change in income that is spent.given total income that is not consumed.given total income that is consumed.:Question 7. Question:(TCO 6) Dissaving meansthe same thing as disinvesting.that households are spending more than their current incomes.that saving and investment are equal.that disposable income is less than zero.Question 8. Question:(TCO 5) Refer to the graph. Which of the following factors will shift AD1 to AD3?Graph DescriptionAn increase in expected returns on investmentAn increase in productivityA decrease in real interest ratesA decrease in consumer wealth:Question 9. Question:(TCO 6) The multiplier is1/MPC.1/(1 + MPC).1/MPS.1/(1 - MPS).Question 10. Question:(TCO 5) The American Recovery and Reinvestment Act of 2009 was implemented primarily toreduce inflationary pressure caused by oil price increases.curb the overspending by households that contributed to the Great Recession.bring the Federal budget back into balance.stimulate aggregate demand and employment.Question 11. Question:(TCO 5) What effect would each of the following have on aggregate demand or aggregatesupply? Explain.a. A decrease in real interest rates paid by the consumerb. An increase in Labor Productivity as a result of a better-educated populationQuestion 12. Question:(TCO 6) Why do some economists believe that tax cQuestion: What is the "current macroeconomic situation" in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.)? What fiscal policies and monetary policies would be appropriate at this time?1. Write your individual answers to the questions listed above together in essay format (minumum of 300 words combined in APA style), using correct economic terms covered in the discussions.If you only write 300 words, you probably won't be able to fully answer the questions. Use the APA Template in Doc Sharing as a guide. You will also find the grading rubric for this assignment in Doc Sharing.2. Key concepts to include in your paper--data trends on unemployment, inflation, GDP growth, expansionary fiscal policy tools, FOMC, easy money policy tools and other terms from this class.3. You must use at least one article. Note: The textbook is not an article and cannot be the only source for the assignments. Use the DeVry Library as a resource for finding your references.(TCO 7) If you write a check on a bank to purchase a used Honda Civic, you are using money primarily asa medium of exchange.a store of value.a unit of account.an economic investment.Question 2. Question:(TCO 7) The amount of money reported as M2is smaller than the amount reported as M1.is larger than the amount reported as M1.excludes coins and currency.includes large ($100,000 or more) certificates of deposit.Question 3. Question:(TCO 7) Answer the question on the basis of the following list of assets:1. Large-denominated ($100,000 and more) time deposits2. Noncheckable savings deposits3. Currency (coins and paper money) in circulation4. Small-denominated (less than $100,000) time deposits5. Stock certificates6. Checkable deposits7. Money market deposit accounts8. Money market mutual fund balances held by individuals9. Money market mutual fund balances held by businesses10. Currency held in bank vaultsRefer to the above list. The M1 definition of money comprises item(s)Question 4. Question:(TCO 7) Assume Company X deposits $100,000 in cash in Commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is 20 percent, Bank A, by itself, can initially increase the money supply by a maximum of$50,000.$180,000.$80,000.$500,000.:Question 5. Question:(TCO 7) A bank temporarily short of required reserves may be able to remedy this situation byborrowing funds in the federal funds market.granting new loans.shifting some of its vault cash to its reserve account at the Federal Reserve.buying bonds from the public.:Question 6. Question:(TCO 7) Which of the following is correct?Both the granting and repaying of bank loans expand the aggregate money supply.Granting and repaying bank loans do not affect the money supply.Granting a bank loan destroys money, repaying a bank loan creates money.Granting a bank loan creates money, repaying a bank loan destroys money.:Question 7. Question:(TCO 7) The asset demand for moneyis unrelated to both the interest rate and the level of GDP.varies inversely with the rate of interest.varies inversely with the level of real GDP.varies directly with the level of nominal GDP.Question 8. Question:(TCO 7) If the quantity of money demanded exceeds the quantity supplied: the supply-of-money curve will shift to the left.the demand-for-money curve will shift to the right.the interest rate will rise.the interest rate will fall.Question 9. Question:(TCO 7) Which of the following is not a tool of monetary policy?Open market operationsChanges in banking lawsChanges in the amount of reserves available at the term auction facilityChanges in the reserve ratioQuestion 10. Question:(TCO 7) In the latter end of 2001 the Fed cut the federal funds rate several times. The Fed's purpose was toprevent rising inflation.stop a banking crisis.stimulate economic growth.strengthen the international value of the dollar.Question 11. Question:(TCO 7) Explain what is meant by fractional reserve banking. Relate this to money creation and risk to the bank.Question 12. Question:(TCO 7) Identify the four major instruments of monetary policy.(TCO 7) If you write a check on a bank to purchase a used Honda Civic, you are using money primarily asa medium of exchange.a store of value.a unit of account.an economic investment.Question 2. Question:(TCO 7) The amount of money reported as M2is smaller than the amount reported as M1.is larger than the amount reported as M1.excludes coins and currency.includes large ($100,000 or more) certificates of deposit.Question 3. Question:(TCO 7) Answer the question on the basis of the following list of assets:1. Large-denominated ($100,000 and more) time deposits2. Noncheckable savings deposits3. Currency (coins and paper money) in circulation4. Small-denominated (less than $100,000) time deposits5. Stock certificates6. Checkable deposits7. Money market deposit accounts8. Money market mutual fund balances held by individuals9. Money market mutual fund balances held by businesses10. Currency held in bank vaultsRefer to the above list. The M1 definition of money comprises item(s)Question 4. Question:(TCO 7) Assume Company X deposits $100,000 in cash in Commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is 20 percent, Bank A, by itself, can initially increase the money supply by a maximum of$50,000.$180,000.$80,000.$500,000.:Question 5. Question:(TCO 7) A bank temporarily short of required reserves may be able to remedy this situation byborrowing funds in the federal funds market.granting new loans.shifting some of its vault cash to its reserve account at the Federal Reserve.buying bonds from the public.:Question 6. Question:(TCO 7) Which of the following is correct?Both the granting and repaying of bank loans expand the aggregate money supply.Granting and repaying bank loans do not affect the money supply.Granting a bank loan destroys money, repaying a bank loan creates money.Granting a bank loan creates money, repaying a bank loan destroys money.:Question 7. Question:(TCO 7) The asset demand for moneyis unrelated to both the interest rate and the level of GDP.varies inversely with the rate of interest.varies inversely with the level of real GDP.varies directly with the level of nominal GDP.Question 8. Question:(TCO 7) If the quantity of money demanded exceeds the quantity supplied: the supply-of-money curve will shift to the left.the demand-for-money curve will shift to the right.the interest rate will rise.the interest rate will fall.Question 9. Question:(TCO 7) Which of the following is not a tool of monetary policy?Open market operationsChanges in banking lawsChanges in the amount of reserves available at the term auction facilityChanges in the reserve ratioQuestion 10. Question:(TCO 7) In the latter end of 2001 the Fed cut the federal funds rate several times. The Fed's purpose was toprevent rising inflation.stop a banking crisis.stimulate economic growth.strengthen the international value of the dollar.Question 11. Question:(TCO 7) Explain what is meant by fractional reserve banking. Relate this to money creation and risk to the bank.Question 12. Question:(TCO 7) Identify the four major instruments of monetary policy.

 

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