1)Transfer payments are included in the government budget deficit but not includ
ID: 1219399 • Letter: 1
Question
1)Transfer payments are included in the government budget deficit but not included in the government purchases component of GDP. True or false
2)The budget of an economy is said to be in deficit when: A. there is a loss of value of a country's currency with respect to one or more foreign reference currencies. B. federal revenues exceed outlays. C. federal outlays exceed revenues. D. anticipated inflation rate exceeds its actual rate.
3)Problems with the federal government budget process include: A. tough choices to be made by Congress each year on which entitlement programs will receive full support. B. a short review period for Congress that results in poor choices in funding programs. C. an overly detailed budget that allows Congress to reward friends, thereby discouraging restraint on spending. D. the constitutional requirement of Congress to balance the budget on an annual basis.
4)A possible explanation for the persistence of the U.S. federal budget deficits is that: A. the economy naturally tends toward recessions. B. it is easier politically to increase government spending than to increase taxes. C. it is easier politically to increase government spending than to decrease taxes. D. it is easier politically to decrease government spending than to decrease taxes.
5)The national debt: A. includes the projected liabilities of Social Security, Medicare, and other federal retirement programs. B. measures the amount by which government revenues exceed outlays in a particular year. C. is a stock variable measuring the net accumulation of past deficits. D. is a flow variable measuring the net accumulation of past deficits.
6)The three important functions of money are _____. A. unit of account, facilitation of trade, and store of value B. store of value, facilitation of trade, and double coincidence of wants C. medium of exchange, unit of account, and store of value D. medium of exchange, facilitation of trade, and unit of account
7)The reserve ratio is the ratio of: A. Federal Reserve member banks to nonmember banks. B. a bank's reserves to its total deposits. C. Federal Reserve member banks to all U.S. banks. D. a bank's total deposits to its reserves.
8)The members of the Board of Governors of the Fed are: A. all replaced after each Presidential election. B. chosen by the state governors. C. elected for seven-year terms. D. appointed by the president with the approval of the Senate.
9)The Board of Governors of the Fed consists of: A. 12 members appointed by the president. B. seven members appointed by the president. C. a representative from each of the 12 district banks. D. seven elected members.
10)The actions of the Fed: A. must be approved by the president and Congress. B. must be approved by the president alone. C. must be approved by Congress alone. D. are not subject to approval by any branch of government.
11)The M1 money supply consists of: A. certificates of deposit only. B. coins and currency held by the nonbank public, checkable deposits, and traveler's checks. C. only coins and currency held by the nonbank public. D. money market mutual fund accounts, savings accounts, and other miscellaneous near-monies.
12)All of the following are part of M2 except one. Which is the exception? A. Large-denomination time deposits B. Traveler's checks C. Money market deposit accounts D. Coins
13)Which of the following is a liability for a bank? A. Deposits with the Fed B. Checkable deposits C. .S. government securities owned by the bank D. Consumer and business loans
Explanation / Answer
1) True
2) C. federal outlays exceed revenues.
3) C. an overly detailed budget that allows Congress to reward friends, thereby discouraging restraint on spending.
4) B. it is easier politically to increase government spending than to increase taxes.
5) C. is a stock variable measuring the net accumulation of past deficits.
6) C. medium of exchange, unit of account, and store of value
7) B. a bank's reserves to its total deposits. The reserve ratio is the proportion of bank's deposit which banks keep with the Fed.
8) D. appointed by the president with the approval of the Senate.
9) D. seven elected members.
10) D. are not subject to approval by any branch of government. It is because Fed has full control over the banking system.
11) B. coins and currency held by the nonbank public, checkable deposits, and traveler's checks.
12) A. Large-denomination time deposits as M2 includes small time deposits.
13) B. Checkable deposits because banks have to pay this amount when depositors demand and have to pay interest on it.
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