DeVry ECON 312 Week 6 Quiz
Question 1
Fiscal policy refers to the
A. deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.
B. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income.
C. altering of the interest rate to change aggregate demand.
D. fact that equal increases in government spending and taxation will be contractionary.
Question 2
Expansionary fiscal policy is so named because it
A. involves an expansion of the nation’s money supply.
B. necessarily expands the size of government.
C. is aimed at achieving greater price stability.
D. is designed to expand real GDP.
Question 3
Discretionary fiscal policy refers to
A. any change in government spending or taxes that destabilizes the economy.
B. the authority that the president has to change personal income tax rates.
C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
D. the changes in taxes and transfers that occur as GDP changes.
Question 4
Money functions as
A. a store of value.
B. a unit of account.
C. a medium of exchange.
D. a store of value, a unit of account, and a medium of exchange.
Question 5
Purchasing groceries using a debit card best exemplifies money serving as a
A. store of value.
B. unit of account.
C. medium of exchange.
D. index of satisfaction.
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Question 6
The paper money used in the United States is
A. National Bank notes.
B. Treasury notes.
C. United States notes.
D. Federal Reserve notes.
Question 7
Which one of the following is presently a major deterrent to bank panics in the United States?
A. the legal reserve requirement
B. the fractional reserve system
C. the gold standard
D. deposit insurance
Question 8
Most modern banking systems are based on
A. money of intrinsic value.
B. commodity money.
C. 100 percent reserves.
D. fractional reserves.
Question 9
Which of the following statements is correct?
A. The actual reserves of a commercial bank equal its excess reserves minus its required reserves.
B. A bank’s liabilities plus its net worth equal its assets.
C. When borrowers repay bank loans, the supply of money increases.
D. A single commercial bank can safely lend a multiple amount of its excess reserves.
Question 10
The reserves of a commercial bank consist of
A. the amount of money market funds it holds.
B. deposits at the Federal Reserve Bank and vault cash.
C. government securities that the bank holds.
D. the bank’s net worth.
