Macroeconomics Final Exam

R. Ziegler

Matching

__1. M-1
__2. monetary tools
__3. reserve requirement
__4. deposit multiplier
__5. Fed
__6. excess reserves
__7. discount rate
__8. open market operations
__9. rational expectations
__10. incomes policies
__11. wage and price controls
__12. Laffer Curve
__13. supply side economics
__14. debt
__15. deficit
__16. crowding out
__17. full employment balanced budget
__18. structural deficit
__19. recessionary gap
__20. inflation
__21. monetarists
__22. equation of exchange
__23. crude quantity theory of money
__24. Milton Friedman
__25. Alan Greenspan
__26. real interest rate
__27. new classical economics
__28. Keynesianism
__29. Supply Shock
__30. new Keynesians
__31. discretionary policy
__32. Chicago School
__33. Austrian School
__34. Phillips Curve

Answers to Multiple Choice

A.the portion of its deposits which a bank must by law keep and not
invest or loan and which must be 'on deposit' at the Fed branch 
it belongs to.

B.the interest rate charged by the Fed for member banks which borrow 
from it to meet reserve requirement and other needs, and which serves
as an index for other interest rates in the country.

C.purports to plot the inverse relationship between tax rates and 
tax revenue collected by government.

D.the quasi-public agency which regulates banking and has great control
over the money supply and other aspects of the economy.
E. attempts to control inflation that set some targets for wages and
prices in the economy as a whole, gives particular firms and industries
detailed guides for making wage and price decisions, and provides
some inducements for firms and unions to follow these guidelines.
F. a set of economic theories built on notions that government should
be 'rolled back' and not have such a permeating role in our economy,
that taxes and other governmental regulation should be reduced, and that
there are constructive market supporting measures that should be undertaken
rather than public attempts to control market forces.
G. the accumulated deficits of the federal government.
H. holds that the experience of inflation will cause people to act as if
they anticipate it to continue as it has, and that this will also cause
their actions to defeat any attempts of government to counteract market forces.
I. neo-classical monetarist who has been one of the most influential 
economic voices of recent times.
J. MV = PQ 

K. actual output is below potential output.
L. Fed transactions through private bond dealers to buy and sell
government securities.
M. holds that a portion of the deficit may be explained by the fact that
the economy may be operating at least than it potential output level.
N. the measure of money supply usually mentioned, and which is the 
smallest, most liquid, and most under Fed control.
O. an annual shortfall of revenue compared to expenditure of government.
P.monetarist, and former associate of objectivist/libertarian Ayn Rand
appointed to head the Fed since Reagan, and who is largely responsible
for the economic prosperity since the middle 80's.
Q. bank holdings over what the Fed requires them to hold, and which 
amount to lost investment and profit.
R. a general rise in the price level.
S. represented by such writers as Hayek and von Mises, and which has 
waged a century long struggle against collectivist economics.
T. try to incorporate some of Keynes' ideas with some of the criticisms
which have arisen with the failures of his perspective.
U. include such things as interest rates, trading of public securities,
reserve requirements, money supply, moral suasion, etc. and which are
largely the domain of the Federal Reserve Bank.
V. publc expenditure which is above receipts and which exists by
Congressional creation of programs which cost more than they are funded
for; prime examples of this would be Social Security, welfare, medicare
and medicare, etc. 
W. monetarist assessment that an increase in the money supply will 
lead only to a rise in the price level.
X. limits imposed by government on the amount by which wages and prices
cna rise in an effort to reduce inflation;  most ambitious examples 
of which have been those during WWI, those of Nixon, and those proposed
by Clinton regarding health care; the historical evidence is largely
against them working very well.
Y. a school of economic thought which dominated the discipline from 
the thirties into the 1980's and which was based on assumptions that 
government could close gaps in aggregate demand by spending more.
Z. adjusted to reflect inflation.
AA. public borrowing precludes some level of credit available to the
private sector.
BB. that business cycle fluctuations are due largely to changes in the
money supply is a basic tenet, but they generally hold market forces
to be superior in effect than activist monetary and fiscal and regulatory
power.
CC. a neo-classical group of economists centered around such economists
as Milton Friedman.
DD. formulated by policy makers in contrast to rigid rules.
EE. plots inflation against unemployment, and originally held that there
was an inverse relationship between the two.
FF. an unexpected disruption of a major resource which has important 
impacts on an economy, such as an oil shortage, etc.
GG. led by such as Robert Lucas, they argue that government cannot use
monetary and fiscal tools to close gaps since people through their
rational expectations will frustrate policy initiatives in attempted
contravention of market forces.
HH. money  put in the bank actually 'creates' new wealth due to the reserves system 
and the velocity of circulation in a way that a Keynesian device purports to measure  

31,32,33,34 A
27,28,29,30 B
23,24,25,26 C
19,20,21,22 D