Question Details

The introduction of daily interest saving accounts attracted a growing portion of funds 



1. "The rapid expansion of M2 occurred as inflation rates were at historically high levels. Instead of saving, people spent and turned money over quickly in the banking system." What terminology do economists use to refer to "turning money over quickly in the banking system"? 
a) a high velocity b) a high multiplier 
c) a high money multiplier d) a high reserve requirement 
2. "The central bank has got it right. Its job is to take the punch bowl away just as the party gets roaring. And if you have 6 percent real growth a quarter like we did last year, it's quite a party you've got going." Why is it necessary to remove this punch bowl? 
a) to prevent inflation b) to stimulate employment 
c) to finance government spending d) to match growth in the demand for money 
3. "Of course, a large body of economists now believes that if the 1970s taught us anything it's that macroeconomic fine-tuning is more trouble than it's worth. In effect, the economy's steering gears are so loose that unless you hit a very sharp curve, fiddling with the wheel is just as likely to do harm as good." This is an argument for 
a) fiscal policy b) driver education 
c) constant money growth d) discretionary monetary policy 
4. "Followers of Milton Friedman of the University of Chicago were convinced that business cycles could be smoothed away simply by requiring the Federal Reserve to ............." Complete this clipping. 
a) keep the money supply constant 
b) increase money supply growth in recessions and decrease it in booms 
c) increase money supply growth in booms and decrease it during recessions 
d) increase the money supply at the same rate during booms and recessions 
5. "The introduction of daily interest saving accounts attracted a growing portion of funds away from checking accounts. The upshot was that a given amount of M1 supported a higher level of total spending, or in other words, its ______ increased." Fill in the blank. 
a) velocity b) money multiplier c) income multiplier d) reserve requirement



Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help