39) A barter system is inefficient for which of the following reasons? A. B. Bec

Question

39) A barter system is inefficient for which of the following reasons? A. B. Because of unanticipated inflation in the money system. Because in barter transactions the gains from trade for buyers come at the expense of an equivalent loss from trade for sellers. Because barter requires coincidence of wants Because people in close-knit communitics Because people in close-knit communities cannot trust the quality of the barter goods being exchanged If loans are $80,000, excess reserves are $3,000, and checkable deposits are $100,000, then the money multiplier must be A. .015 40) B. 15 C. 6.7 D. 66.7 - E. none of the above Which of the following is an example of an automatic stabilizer? A. Congress legislates lower tax rates to increase consumption and investment B. Tax rates are increased during a recession to maintain a balanced badget C.. A regressive income tax system reduces tax revenues (as a share of income) as income expands. D. Revenues from the corporate income tax increase sharply during a business boom but decline 41) substantially during a rocession, even though no new tax legislation has been enacted 42) Suppose Henry's income is $40,000 and he pays a tax of $2,000. Lorna's income is $100,000 and she pays a tax of S5,000. Such a tax system is: A. regressive. B. progressive. C. proportional. 43) Unemployment compensation payments: rise during a recession and thus reduce the severity of the recession. B. rise during a recession and thus increase the severity of the recession. C. rise during inflationary episodes and thus reduce the severity of the inflation. D. fall during a recession and thus increase the severity of the rocession. ·A- The currency of the United States is: A. backed dollar for dollar by gold B. backed by a gold cover of 50 percent HELP WTTH 44) not backed by any precious metal. D. backed by the government's silver reserves E. back by the government's gold and silver reserves. -C. ENTIRE PAL 45) The Federal Reserve System was founded in: 1913. B. 1929 C. 1933 LAS D. 1935 Income tax collections: A. fall during periods of prosperity, thus increase federal budget deficits. B rise during periods of prosperity, thus reduce federal budget deficits. C. fall during recessions, thus increase the problem of unemployment. D. rise during recessions, thus increase the problem of unemployment. 46) 47) Supply-siders' policy recommendations include: lower tax rates, spending cuts, and increased government regulation. B. lower tax rates, lower resource prices, and decreased government regulation. C. lower tax rates, spending increases, and decreased government regulation. D. lower tax rates, spending increases, and increased government regulation. E. higher tax rates, spending cuts, and decreased government regulation. -A.

Explanation / Answer

30. (B) If the Federal Reserve decides to lower the reserve ratio through an expansionary monetary policy, commercial banks are required to hold less cash on hand and are able to increase the amount of loans to give consumers and businesses. This increases the money supply, economic growth and the rate of inflation.

28. (D) The reserves in the banking system (which are liabilities of the Fed) were created when the Fed made large-scale purchases of interest-bearing securities (the corresponding Fed assets). The interest received by the Fed has thus far been much greater than the interest it has paid out. The difference between interest received by the Fed and the interest paid to banks—over $550 billion since 2009—is turned over to the US Treasury.

39. (c)

45. (A)

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