24) Which of the following is a checkable and debitable account? 24) A) a saving

Question

24) Which of the following is a checkable and debitable account? 24) A) a savings account B) a checking account C) a brokerage account with your stockbroker D) All of the above are checkable and debitable accounts. 25) The current chair of the Board of Govemors of the Federal Reserve is 25)O A) Alan Greenspan. 9 Janet Yellen. B) John Snow. D) Henry Paulson. 26) Supply-sid e economics focuses on tax cuts to stimulate 26) A) aggregate supply by increasing production. B) household consumption. C) aggregate demand by reducing saving. D) government spending 27) Money market mutual funds are funds pooled by A) a group of people to buy U.S. Treasury bonds. B) a group of people to buy stock market funds. C) a group of people to buy short maturity credit instruments D) a group of people to buy shares of stocks. 28) All of the following are automatic fiscal stabilizers EXCEPT 28) A) a decrease in unemployment compensation payments during an expansion. B) a decrease in overall tax revenues during a recession. C) a congressionally mandated decrease in tax rates to stimulate the economy. D) an increase in unemployment expenditures during a recession. 29) When the Fed sells a U.S. bond in the open market 29) A) total reserves will increase. B) total reserves do not change but the money supply increases C) total reserves do not change but the money supply decreases. D) total reserves will decrease 30) The public debt is 30 A) an excess of government spending over govenment revenues during a given time period. B) the total value of all outstanding federal government securities. C) all federal government debt irrespective of who owns it D) a situation in which the govenment's spending is exactly equal to the total taxes and other revenues it collects during a given time period 31) 31) According to the interest-rate-based transmission mechanism for monetary policy, a decrease in A) interest rate to rise, causing planned real investment spending to rise and leading to a B) interest rate to fall, causing planned real investment spending to rise and leading to an C) interest rate to fall, causing planned real investment spending to rise and leading to a D) interest rate to rise, causing planned real investment spending to fall and leading to a the money supply will cause the decrease in aggregate demand increase in aggregate demand. decrease in aggregate demand. decrease in aggregate demand B-4

Explanation / Answer

24. B) a checking account

A checkable and debitable account is one on which the holder can write checks.

26. A) aggregate supply by increasing production

Tax cut decreases cost of production of firm which increases supply of commodity in the market. It leads to rightward shift of the AS curve.

29. D) total reserves will decrease

Selling of government securities by the Fed in the open market reduces reserve of banks to lend general public.

30. B) the total value of all outstanding federal government securities.

31. D) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand.

Increase in interest rate leads to decrease in investment which reduces I component of AD. Decrease in I shifts AD leftwards.

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