1. Which statement is false?

A) The main job of the Fed is to control the rate of monetary growth

B) The Fed is more effective at fighting inflation than recession

C) Open market operations are carried out for the Fed by private government bond dealers

D) None of the statements are false

2. The larger the reserve ratio the

A) smaller the deposit expansion multiplier

.B) larger the deposit expansion multiplier

C) less the impact of an increase in reserves

3. In order to buy securities the Fed offers

A) a low price and drives up interest rates

B) a low price and drives down interest rates

C) a high price and drives up interest rates

D) a high price and drives down interest rates

4. Which is not a job of the Federal Reserve?

A) Check clearing

B) Issuing currency

C) Insuring bank deposits

D) Controlling the rate of growth of the money supply

5. Commercial banks are required by law to hold reserves. These reserves are specified as percentages of a bank's

A) Total assets

B) Total liabilities

C) Checkable deposit liabilities

D) Holdings of government securities

E) Net worth

6. Which of the following statements best describes the twelve Federal Reserve Banks?

A) They are privately owned and privately controlled central banks whose basic goal is to provide an ample and orderly market for United States Treasury securities

B) They are privately owned and publicly controlled central banks whose basic function is to minimize the risks in commercial banking in order to make it a reasonably profitable industry

C) They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare

D) They are privately owned and publicly controlled central banks whose basic goal is to earn profits for their owners

E) They are publicly owned and publicly controlled central banks whose basic goal is to provide income for the Treasury

7. Which statement is true?

A) Open market operations are seldom conducted any more

B) The basic way the Fed controls the money supply is by manipulating the discount rate

C) During periods of severe recession, the Fed tries to push up interest rates

D) None of the statements are true

8. Statement I: When the Federal Reserve Bank issues currency, this increases our money supply.
Statement II: Most of our currency is printed by the United States Treasury.

A) Statement I is true and statement II is false

B) Statement II is true and statement I is false

C) Both statements are true

D) Both statements are false

9. When the Federal Reserve buys U.S. government securities on the open market, this tends to ____ bank reserves and ____ the money supply.

A) raise; raise

B) lower; lower

C) raise; lower

D) lower; raise

10. Attempts to influence interest rates, credit conditions, and the money supply are called

A) fiscal policy

B) mixed economic policy

C) discounting

D) moral suasion

E) monetary policy

11. If a bank subject to a 10% required reserve ratio has $10,000 in excess reserves, it can extend, at a maximum, which quantity of new loans?

A) $1,000

B) $9,000

C) $10,000

D) $100,000

12. In the 1970s and 1980s our productivity

A) increased at an increasing rate

B) Increased at a decreasing rate

C) Stayed about the same

D) decreased.

13. Which statement is true?

A) Immigration is higher today than at any other time during this century

B) Basically the immigration into this county slows our rate of economic growth

C) There is virtually no restriction on immigration into the United States

D) None of these statements are true

14. The Malthusian theory said that population tended to grow in a(n) _____ progression, while the food supply tended to grow in a(n) _____ progression.

A) arithmetic; arithmetic

B) geometric; geometric

C) geometric; arithmetic

D) arithmetic; geometric

15. Our gross savings as a percentage of GDP has generally been in the ____% range over most of the last 40 years.

A) 14-18

B) 18-22

C) 22-26

D) 26-30

16. The most obvious measure of low levels of development is

A) oil production

B) lack of water

C) low per capita income levels

D) bilingualism
E) a dual economy

17. Which statement is TRUE?

A) There is no such thing in the United States as a permanent underclass

B) There is no relationship between poverty and the twin problems of crime and drugs

C) Poverty, crime, and welfare dependency have all fallen since the mid-1990s
18. Labor productivity is measured by

A) the ratio of capital to labor

B) real output per worker hour

C) real output per capita

D) the ratio of worker hours to real GDP

19. Which one of the following is the most accurate statement?

A) Baumol's Disease explains most of our loss of manufacturing jobs to foreign competitors

B) The productivity of many workers in the service sector cannot be increased

C) William Baumol believes that the expansion of the health care industry will greatly increase our productivity growth rate in the coming decades

D) The sharp increase in productivity growth since 1995 proves that Baumol's Disease has been cured

20. Which statement is true?

A) The United States has the highest standard of living in the world

B) Within the next two decades, the United States will no longer have the largest economy in the world
C) The information phase of the Industrial Revolution took off in the 1990s

D) The American economy has been going downhill since the mid-1990s.