Econ Hw

Topics: Federal Reserve System, Monetary policy, Currency Pages: 6 (1448 words) Published: August 19, 2013
1. Would Henry Hazlitt more likely:
a.Say we are already suffering the long-run consequences of the policies of the remote or recent past. b.Advocate public or collective ownership and administration of the means of production and distribution of goods. c.Argue for more governmental stimulus to help the economy.

2.Would Henry Hazlitt more likely say:
a.That government should fund public works to maintain full employment. b.The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. c.From each according to his ability, to each according to his needs.

3.(10 points) In Henry Hazlitt’s “Broken Window” story the glazier gained $250 in business because the hoodlum broke the window of the baker. Some witnesses argue that the glazier will now have $250 more to spend with other merchants and that the smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor. How might Henry Hazlitt respond to this position? (Answer in 200 words or less)

In the "Broken Window" Hazlitt states that that money could have also gone to the tailor that the baker was intending to buy a suit from, so the tailor is in turn losing potential money earnings. Also, destroying property diminishes the value of the area, so overall it is a loss for the community. Hazlitt would say that the tailor, many people, are being left behind in the consideration and that all angles need to be evaluated to be a good economist.

4. Changes in the quantity of money affect
a.interest rates
b.prices
c.production
d.All of the above are correct

5.Which list ranks assets from most to least liquid?
a.currency, fine art, stocks
b.currency, stocks, fine art
c.fine art, currency, stocks
d.fine art, stocks, currency

6.Fiat money
a.has no intrinsic value.
b.is backed by gold.
c.has intrinsic value equal to its value in exchange.
d.is any close substitute for currency such as checkable deposits.

7.The agency responsible for regulating the money supply in the United States is a.the Comptroller of the Currency.
b.the U.S. Treasury.
c.the Federal Reserve.
d.the U.S. Bank.

8.When the Federal Reserve conducts open-market operations to increase the money supply, it a.redeems Federal Reserve notes.
b.buys government bonds from the public.
c.raises the discount rate.
d.decreases its lending to member banks.

9.Which of the following Fed actions would both increase the money supply? a.buy bonds and raise the reserve requirement
b.buy bonds and lower the reserve requirement
c.sell bonds and raise the reserve requirement
d.sell bonds and lower the reserve requirement

10.Over the last 70 years the average annual U.S. inflation rate was about a.1 percent.
b.4 percent.
c.6 percent.
d.8 percent.

11.Deflation
a.increases the ability to pay debts and raises the value of money. b.increases the ability to pay debts and lowers the value of money. c.reduces the ability to pay debts and raises the value of money. d.reduces the ability to pay debts and lowers the value of money.

12.Open-market purchases by the Fed make the money supply
a.increase, which makes the value of money increase.
b.increase, which makes the value of money decrease.
c.decrease, which makes the value of money decrease.
d.decrease, which makes the value of money increase.

13.An associate professor of economics gets a $100 a month raise. She figures that with her current monthly salary she can't buy as many goods as she could last year. a.Her real and nominal salary have risen.

b.Her real and nominal salary have fallen.
c.Her real salary has risen and her nominal salary has...
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