Econ 202 UO midterm

The most direct way in which money replaces barter is through its use as a:

• A) medium of exchange.

• B) recording device.

• C) store of value.

• D) unit of account.

2) The capital stock increases whenever:

• A) gross investment exceeds net investment.

• . B) net investment exceeds gross investment.

• C) gross investment is negative.

• D) net investment is positive.

3) The labor force is defined as:

• A) all people capable of work.

• B) workers with jobs plus unemployed workers.

• C) people with full time jobs.

• D) All of the above answers are correct.

Last year's price level was 120 and this year the inflation rate was 5 percent. This year's price level is:

• 126

• 130

• 125

• none

5) In an open market purchase, the Federal Reserve ________ financial assets, which ________ bank reserves.

• A) buys; increases

• B) buys; decreases

• C) sells; increases

• D) sells; decreases

The Federal Reserve's purchase of U.S. Treasury Bonds could

• A) increase loans made by banks.

• B) decrease bank reserves.

• C) be an effective anti-inflationary policy

• D) decrease the price level and have no effect on real GDP.

7) The part of the Federal Reserve System that sets monetary policy is called the:

• A) Board of Governors.

• B) Federal Open Market Committee.

• C) Joint Congressional Committee on Monetary Policy

• D) Federal Reserve bank presidents.

8) The Federal Open Market Committee (FOMC) is composed of

• A) Presidents of 5 Federal Reserve regional banks and the Board of Governors.

• B) the 12 Presidents of the Federal Reserve regional banks.

• C) the Board of Governors, the Vice-President of the United States, and the Secretary of Treasury for the United States.

• D) representatives from the governors of all 50 states.

9) If an American firm produces goods in the United States that are sold to a German household, then

• A) German GDP increases but not U.S. GDP.

• B) net exports in the United States will not change because an export immediately generates an offsetting import

• C) U.S. GDP increases

• D) the transaction is considered an export in the German GDP accounts.

10) The largest component of the M2 monetary aggregate is

• A) time deposits

• B) other liquid deposits

• C) currency

• D) money market mutual funds