Quiz 2 Macroeconomics
Dr. Ben Tafoya
Each question is worth 25 points. Make sure you answer each component.
1. How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important? Distinguish between refinancing the debt and retiring the debt. How does an internally held public debt differ from an externally held public debt?

2. What are the components of the M1 money supply? What is the largest component? Which of the components of M1 is legal tender? What near-monies are included in the M2 money supply?

3. Suppose the price level and value of the dollar in year 1 are 1 and $1, respectively. If the price level rises to 1.25 in year 2, what is the new value of the dollar? If, instead, the price level falls to .50, what is the value of the dollar? What generalization can you draw from your answers?

4. What are seven basic functions of the Federal Reserve System?

Quiz 2 Macroeconomics
Dr. Ben Tafoya
Each question is worth 25 points. Make sure you answer each component.
1. How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important? Distinguish between refinancing the debt and retiring the debt. How does an internally held public debt differ from an externally held public debt?

2. What are the components of the M1 money supply? What is the largest component? Which of the components of M1 is legal tender? What near-monies are included in the M2 money supply?

3. Suppose the price level and value of the dollar in year 1 are 1 and $1, respectively. If the price level rises to 1.25 in year 2, what is the new value of the dollar? If, instead, the price level falls to .50, what is the value of the dollar? What generalization can you draw from your answers?

4. What are seven basic functions of the Federal Reserve System?