Point Value: 3.12
3.This question has not been answered completely
Continue with the information about Summer Bank after the deposit.
Enter only numbers, a decimal point, and/or a negative sign if needed. Round all answers to two decimal places as necessary.
What is Summer Bank’s excess reserves after the deposit?

Point Value: 3.12
4.This question has not been answered completely
Note the special directions for this question.
Continue with the information about Summer Bank after the deposit.
Enter only numbers, a decimal point, and/or a negative sign if needed. Round all answers to two decimal places as necessary. Put a negative sign before your number if it is an decrease in M1, 0 if there is no change, or a positive number with no sign if it is an increase.
What is the resulting change in M1 as a result of Bill’s actions?

Point Value: 3.12
5.This question has not been answered completely
Continue with the information about Summer Bank after the deposit.
Enter only numbers, a decimal point, and/or a negative sign if needed. Round all answers to two decimal places as necessary.
What is the maximum amount of money Summer Bank can now create by itself?

Point Value: 3.12
6.This question has not been answered completely
Continue with the information about Summer Bank after the deposit.
Enter only numbers, a decimal point, and/or a negative sign if needed. Round all answers to two decimal places as necessary.
What will the total money supply (M1) be if all banks make the maximum amount of money?

Point Value: 3.12
7.This question has not been answered completely
If prices were no longer sticky and information were no longer asymmetric, then
•
A. the LRAS would get flatter and look more like the SRAS
•
B. the SRAS would get steeper and look more like the LRAS
•
C. the LRAS would get steeper and look more like the SRAS
•
D. the SRAS would get flatter and look more like the LRAS
Point Value: 3.12
8.This question has not been answered completely
In the long run, a decrease in taxes on households would most likely cause the price level to _______ and the natural rate of output to _____.
•
A. rise, fall
•
B. fall, rise
•
C. fall, remain unchanged
•
D. remain unchanged, remain unchanged
•
E. rise, remain unchanged
Point Value: 3.12
9.This question has not been answered completely
If in the long run the Fed buys US government bonds from banks, we would expect _________ and output to ____________.
•
A. inflation, remain unchanged
•
B. deflation, remain unchanged
•
C. deflation, fall
•
D. inflation, rise
•
E. none of the above
Point Value: 3.12
10.This question has not been answered completely
Note the special directions for this question:
Consider an economy in which households save 9% of each additional dollar in their paychecks. If the government does easy fiscal policy through taxation in the amount of $4150, the overall effect on output/income would be:??Enter only numbers, a decimal point, and/or a negative sign if needed. Round your final answer to two decimal places as necessary and any intermediate steps to four decimal places if needed. Put a negative sign before a decrease and nothing before an increase.

Point Value: 3.12
11.This question has not been answered completely
You will use this information for the next two questions:
Consider a situation in which banks, terrified by recent defaults on loans, cut back drastically on who qualifies for home and business lending. In the short run we would see _______ and as we move to the long run we would see ________.
•
A. AD left; SRAS right
•
B. AD left; SRAS left
•
C. AD right; SRAS left
•
D. AD right; SRAS right
Point Value: 3.12
12.This question has not been answered completely
Consider again the scenario from the previous question. The overall long-run effect of this scenario would be
•
A. deflation and no change in the natural rate of unemployment
•
B. inflation and no change in the natural rate of unemployment
•
C. deflation and a decrease in the natural rate of unemployment
•
D. inflation and a decrease in the natural rate of unemployment
•
E. none of the above
Point Value: 3.12
13.This question has not been answered completely
The more households save
•
A. the larger the MPC and the more effective fiscal policy will be
•
B. the smaller the MPC and the more effective fiscal policy will be
•
C. the larger the MPC and the less effective fiscal policy will be
•
D. the smaller the MPC and the less effective fiscal policy will be
Point Value: 3.12
14.This question has not been answered completely
The short-run effect of better production technology would be ___________ in the price level and _________ in equilibrium output.
•
A. an increase; a decrease
•
B. a decrease; an increase
•
C. an increase; no change
•
D. a decrease; no change
•
E. an increase; an increase
•
F. none of the above
Point Value: 3.12
15.This question has not been answered completely
Note the special directions for this question:
For the next five questions, consider Economy Q, described below:
– As always, all banks must hold 10% of demand deposits (checking) in the form of required reserves.?- All banks together have $50,000 in checking accounts and $15,000 deposit in the Fed.?- All banks together have $6,000 in cash, and all citizens together have $2,500 in cash.
Calculate the currency ratio k for this economy.
Enter only numbers, a decimal point, and a negative sign, as needed. Do not convert your answer into a percent. Round your final answer to three decimal places.

Point Value: 3.12
16.This question has not been answered completely
Note the special directions for this question:
Continue with the information about Economy Q.
Calculate er for this economy.
Enter only numbers, a decimal point, and/or a negative sign as necessary. Do not convert your answer into a percent. Round your final answer to three decimal places.

Point Value: 3.12
17.This question has not been answered completely
Note the special directions for this question:
Continue with the information about Economy Q.
Calculate the naive multiplier for this economy.
Enter only numbers, a decimal point, and/or a negative sign as necessary. Do not convert your answer into a percent. Round your final answer to three decimal places.

Point Value: 3.12
18.This question has not been answered completely
Note the special directions for this question:
Continue with the information about Economy Q.
Calculate the real-world multiplier for this economy, using the rounded values from previous questions.
Enter only numbers, a decimal point, and/or a negative sign as necessary. Round your final answer to three decimal places.

Point Value: 3.12
19.This question has not been answered completely
This is the last question that will deal with Economy Q.
If the central bank of Economy Q wanted each dollar of monetary base to create more dollars of the money supply, it could
•
A. encourage citizens to hold more cash and raise er
•
B. encourage citizens to hold less cash and lower er
•
C. encourage citizens to hold less cash and raise er
•
D. encourage citizens to hold more cash and lower er
Point Value: 3.12
20.This question has not been answered completely
Note the special directions for this question:
The government reduces its spending by $4000 in an economy where households save 25% of each additional dollar they earn. Eventually, the AD curve will shift by:
Enter only numbers, a decimal point, and/or a negative sign if needed. Round your final answer to the nearest penny. Put a negative sign before your answer if AD will shift to the left and no sign before your answer if AD will shift to the right.

Point Value: 3.12
21.This question has not been answered completely
If the marginal propensity to consume is the same no matter what form fiscal policy takes, then the government will shift the AD curve leftward most by
•
A. increasing its spending
•
B. decreasing its spending
•
C. increasing taxes
•
D. decreasing taxes
Point Value: 3.12
22.This question has not been answered completely
In general, things that shift the SRAS shift the LRAS in the same direction. What one factor shifts only one of the AS curves, and which curve is it?
•
A. expected inflation; SRAS
•
B. expected inflation; LRAS
•
C. productivity; LRAS
•
D. productivity; SRAS
•
E. none of the above
Point Value: 3.12
23.This question has not been answered completely
Data that would support Ricardian equivalence might include
•
A. information that Americans don’t know when the government engages in deficit spending
•
B. information that Americans borrow more when the government does
•
C. information that financial planners advise saving more during easy fiscal policy
•
D. all of the above
Point Value: 3.12
24.This question has not been answered completely
The LRAS is
•
A. more elastic and steeper than the SRAS
•
B. more elastic and flatter than the SRAS
•
C. less elastic and flatter than the SRAS
•
D. less elastic and steeper than the SRAS
Point Value: 3.12
25.This question has not been answered completely
Which of the following is an example of crowding out?
•
A. Low interest rates discourage government spending.
•
B. The government spending more in taxes than it earns in government payments.
•
C. Decreases in investment that occur because too high of a budget deficit drives up interest rates.
•
D. Increases in government spending providing income, and therefore spending money, for households.
Point Value: 3.12
26.This question has not been answered completely
Note the special directions for this question:
For the next five questions, consider Columbia, which has two identical banks, Bank A and Bank B, with the following information:
Each bank has $400 in cash, $1700 Deposit in the Fed, $8000 in checking accounts, $1250 in US government bonds, and $1200 in savings accounts.
The citizens of Columbia hold $11,300 in cash; all banks are required to hold required reserves as we’ve used them throughout all assignments.
Calculate the currency ratio for Columbia, noting that this is an economy-wide variable (so use information from both banks).
Enter only numbers, a decimal point, and a negative sign as needed. Do not convert your answer into a percent. Round your final answer to three decimal places.

Point Value: 3.12
27.This question has not been answered completely
Note the special directions for this question:
Continue working with the information about Columbia.
Calculate the desired excess reserves ratio for Columbia, noting that this is an economy-wide variable (so use information from both banks).
Enter only numbers, a decimal point, and a negative sign as needed. Do not convert your answer into a percent. Round your final answer to three decimal places.

Point Value: 3.12
28.This question has not been answered completely
Continue working with the information about Columbia.
Based on Bank A’s reserves, calculate the maximum amount of money that all banks in the banking system for Columbia can create (the fact that there are only two banks will not affect your answer).
Enter only numbers, a decimal point, and a negative sign as needed. Round your answer to the nearest penny.

Point Value: 3.12
29.This question has not been answered completely
Continue working with the information about Columbia.
Now let’s say that the central bank of Columbia decides to do $300 in easy open market operations with Bank A only. After this open market operation is complete, calculate the maximum amount of money that Bank A can create on its own.
Enter only numbers, a decimal point, and a negative sign as needed. Round your final answer to the nearest penny.

Point Value: 3.12
30.This question has not been answered completely
Continue working with the information about Columbia.
After the open market operation transaction is complete, calculate the maximum amount of money that the whole banking system, working together, can now create, based on Bank A’s reserves.
Enter only numbers, a decimal point, and a negative sign as needed. Round your final answer to the nearest penny.

Point Value: 3.12
31.This question has not been answered completely
Note the special directions for this question.
Consider an economy in which households spend 81% of each additional dollar of income. If the government increases taxes by $5960, what will the overall effect be on output/income???Enter your answer rounded to the nearest penny, including only numbers, a decimal point, and/or a negative sign if needed. Round any intermediate steps to four decimal places. Enter a positive number for an increase and a negative number for a decrease.

Point Value: 3.12
32.This question has not been answered completely
If the demand for loanable funds curve is flatter than the supply of loanable funds curve, then deficit spending will increase interest rates _______ and crowding out will likely be ________ problem.
•
A. a lot; a big
•
B. a little; a small
•
C. a lot; a small
•
D. a little; a big