Question

20.

Which of the following aptly describes the mission of the Federal Reserve Bank?

A profit generating center.

The banking industry’s private bank.

The government’s private bank.

21.

Quantitative easing undertaken after 2008 is different from traditional central bank intervention in that it focused on

raising private bank’s revenues and therefore encouraging investment.

purchasing long-term government securities to encourage long-term capital projects and ease mortgage conditions.

purchasing “toxic assets” and restoring credit to the private sector.

23.

What crucial role does the private banking system play in the market?

It minimizes investors' risks.

It establishes a channel between borrowers and savers.

Maintains transactions records to enable the government to collect taxes.

26.

Which of the following statements is true about the Phillips Curve and Aggregate Supply curve?

During a recession when GDP is below potential, inflation is high according to the Keynesian zone of the AS curve.

Along the Keynesian zone of an AS curve, inflation is low when unemployment is high.

The short-run Aggregate Supply and Phillips Curve curves are upward sloping.

27.

If Ricardian Equivalence theory holds completely true, then any change in budget deficits or budget surpluses would be completely offset by which of the following?

A sustained pattern of trade imbalances.

A change in currency exchange rates.

A corresponding change in private saving.

Answer 1

Answers.

20)The government’s private bank.

21)Purchasing “toxic assets” and restoring credit to the private sector.

23)It establishes a channel between borrowers and savers.

26)During a recession when GDP is below potential, inflation is high according to the Keynesian zone of the AS curve.

27)A corresponding change in private saving.