Practice test 2 Flashcards
(34 cards)
Karl Marx said
Our consumption should be based on our production
In the 1950s, socialists changed their emphasis in advocating socialism in capitalist countries. Why?
Because of successive military defeats
With imminent domain, an individuals property
Is taken with compensation
The latest socialist rationale is
if an individual receives benefits from goods provided by the state, the state has a right to the individuals property
Many capitalist philosophers agree that legitimate functions of the state are to
protect personas and property
The US poverty rate is about
16%
A free market rate at which banks lend to other banks is
The Federal Funds Rate
If the required reserve ratio is .25 and the Fed sells $100B in government bonds, then throughout the banking system, then the money supply
Falls by $400 B
Which is not one of the listed functions of money
A factor of production
Which is true?
If a commodity beomes money, no one will use it anymore as a commodity and for a commodity to successfully become money, no one must be able to produce more of it
M1 includes
Paper currency held outside banks
checking account balances
travelers checks
Which is not a tool of monetary policy
Making loans to businesses
Which is true about the Federal Open Market Committee
They vote on all monetary policy initiatives
Which of the Fed’s tools is considered dangerous
The required reserve ratio
If the CPI in 2013 is 650 with a base year of 1967, then
b) the same stuff that would have cost $100 in 1967, cost $650 in 2013
d) prices in 2013 are 650 times higher than they were in 1967
If the CPI in 2013 is 650 with a base year of 1967, then
b) the same stuff that would have cost $100 in 1967, cost $650 in 2013
d) prices in 2013 are 650 times higher than they were in 1967
If bubbles earned $50,000 in 1995 when the CPI was 150 and earned $60000 in 2002 when the CPI was 180
Bubbles was equally well off in the two years
The equation of exchange says
The nations output is bought by the money supply turning over
Which is NOT an assumption of Monetarism?
All of the above are assumptions:
The equation of exchange holds
velocity is a stable function of a few variables
eventually output is at its potential
In the helicopter drop story
a) In the short run and increase in the money supply can increase output
c) in the long run an increase in the money supply increases prices proportionally
Both A and C
With unanticipated inflation
Those with significant long term contracts to pay for goods or services see their wealth RISE
Inflation can cause unemployment because
Borrowers gain and lenders lose
What is behind the idea of “the inflationary tax?”
Inflation reduces the real value of governemnt debt
With the gold standard
A)average inflation was lower
B) Inflation had smaller swings above and below its average
