Econ 101 Final Exam ACTUAL Exam Questions and CORRECT Answers
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Course
Econ 101
Institution
Econ 101
Econ 101 Final Exam ACTUAL Exam
Questions and CORRECT Answers
Which of the following statements correctly identifies a reason why low inflation can
have a positive benefit to the economy?
A)
Inflation increases consumer demand which is necessary for combating
slowdowns
Econ 101 Final Exam ACTUAL Exam
Questions and CORRECT Answers
Which of the following statements correctly identifies a reason why low inflation can
have a positive benefit to the economy?
A)
Inflation increases consumer demand which is necessary for combating
slowdowns.
B) Inflation increases consumer confidence, which is an absolute necessity to counteract
business cycles.
C)Inflation reduces money costs and hence stimulates an economy during slowdowns.
D) Inflation sometimes increases the demand for workers that increases output and
helps combat slowdowns. - CORRECT ANSWER - D) Inflation sometimes increases the
demand for workers that increases output and helps combat slowdowns
The funds being lent in the federal funds market are: - CORRECT ANSWER - reserves at
the Fed
A bank is insolvent when: - CORRECT ANSWER - its total liabilities exceed its total
assets.
When the Fed buys or sells government bonds to private banks in exchange for reserves, it is
referred to as: - CORRECT ANSWER - open market operations.
The federal funds market refers to the market where: - CORRECT ANSWER - banks
obtain loans of reserves from each other.
,Assuming all else equal, a rise in the rate of interest: - CORRECT ANSWER - results in a
fall in the quantity of credit demanded.
When an asset is used as a universal yardstick that is used for expressing the worth of
different goods and services, it is serving the function of a ________. - CORRECT
ANSWER - unit of account
The price of a loan is referred to as: - CORRECT ANSWER - interest
Which of the following is a role of the Federal Deposit Insurance Corporation in the United
States?
A) It monitors the money supply.
B) It safeguards deposits held with banks.
C) It determines the monetary policy of the country.
D) It controls the real rate of interest. - CORRECT ANSWER - B) It safeguards deposits
held with banks
Which of the following statements is true?
A) If a bank lends a sum of $600 to a firm, the sum is a part of the bank's liability.
B) If a firm deposits a sum of $500 in a bank, the sum is a part of the bank's liability.
C)If a bank lends a sum of $200 to a household, the sum is a part of the bank's liability.
, D) If a firm deposits a sum of $500 in a bank, the sum is a part of the bank's assets. - CORRECT
ANSWER - B) If a firm deposits a sum of $500 in a bank, the sum is a part of the bank's
liability
When an asset is traded for goods and services it is serving the function of a ________. -
CORRECT ANSWER - medium of exchange
Demand deposits are termed so because: - CORRECT ANSWER - depositors can
withdraw money from such deposits at any point of time.
The ________ is the interest rate that banks charge each other for overnight loans of reserves. -
CORRECT ANSWER - federal funds rate
Which of the following is likely to shift the credit demand curve of an automobile manufacturer
to the right, assuming all else equal?
A) A plan to decrease production and exit from existing markets
B) A plan to increase production and expand to newer markets
C) An increase in the real interest rate
D) A decrease in the real interest rate - CORRECT ANSWER - B) A plan to increase
production and expand to newer markets
An optimizing economic agent will use the ________ rate while calculating the
economic cost of a loan. - CORRECT ANSWER - real interest
Everything else remaining unchanged, what will happen if the Fed sells government
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