Reserve Ratio – Principles of Macroeconomics Exam

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Reserve Ratio, Financial Institutions, Inflation, Principles of Macroeconomics Final Exam

The key words in this Macroeconomics course include Reserve Ratio, Bank, Inflation, Unemployment, Financial Institutions, Short-Run, Aggregate Supply, Monetary Policy, Monetary Neutrality, Money Supply, Principles of Macroeconomics.


If a bank has a required reserve ratio of 15 percent and has required reserves of $225,000,000, how much does the bank hold in deposits?

There is not enough information to solve this problem.

$33,750,000

$210,000,000

$1,500,000,000

$240,000,000


Which two famous economists hypothesized that people would adapt their expectations about inflation to something consistent with their prior experiences?

John Maynard Keynes and F. A. Hayek

Ben Bernanke and Alan Greenspan

Adam Smith and David Ricardo

Irving Fisher and Adam Smith

Milton Friedman and Edmund Phelps


When the Fed buys bonds from financial institutions, new money moves directly

out of the hands of consumers.

into short-run aggregate supply.

out of the loanable funds market.

into the hands of consumers.

into the loanable funds market.


Which two economic conditions challenged assumptions of activist monetary policy in the 1970s?

declining real gross domestic product (GDP) and high unemployment

increased aggregate demand and decreased short-run aggregate supply

low inflation and low unemployment

high inflation and high unemployment

low inflation and high unemployment


With adjusting expectations, the equilibrium at the natural rate of unemployment is obtained by

rational expectations theory.

movement along the short-run Phillips curve.

a fixed short-run Phillips curve.

fixed prices.

shifts in the short-run Phillips curve.


Monetary neutrality is

the short-run inverse relationship between inflation and unemployment rates.

the idea that the money supply does not affect real economic variables.

when a central bank acts to increase the money supply.

the combination of high unemployment and high inflation.

when a central bank acts to decrease the money supply.


If a bank has a required reserve ratio of 15 percent and has required reserves of $225,000,000, how much does the bank hold in deposits?

There is not enough information to solve this problem.

$33,750,000

$210,000,000

$1,500,000,000

$240,000,000


Which two famous economists hypothesized that people would adapt their expectations about inflation to something consistent with their prior experiences?

John Maynard Keynes and F. A. Hayek

Ben Bernanke and Alan Greenspan

Adam Smith and David Ricardo

Irving Fisher and Adam Smith

Milton Friedman and Edmund Phelps