Question

1. A possible budget reform involves _____

   	a.	adopting a quadrennial budget.
   	b.	eliminating the operating budget.
   	c.	simplifying the budget document by concentrating only on major groupings and eliminating line items.
   	d.	breaking down the budget into increasingly small budget lines.
   	e.	appointing agency heads with different priorities than those of elected representatives.

Banks act as financial intermediaries by _____

	a.	selling shares of stock to investors.
	b.	printing money for all to use.
	c.	attracting deposits from savers to lend to borrowers.
	d.	bringing together car buyers and auto dealers.
	e.	bringing together real estate brokers and home buyers

Consider an economy made up of 100 people who are sixteen years of age and older, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the labor force is _____

	a.	30.
	b.	90.
	c.	85.
	d.	60.
	e.	70.

Discretionary fiscal policy _____

	a.	are revenue and spending programs in the federal budget that automatically adjust with the ups and downs of the economy.
	b.	are monetary policy changes.
	c.	is the deliberate manipulation of government purchases, transfer payments, and taxes to promote macroeconomic goals.
	d.	are emergency manipulation of government purchases, transfer payments, and taxes to promote macroeconomic goals.
	e.	are revenue and spending programs in the federal budget that never adjust with the ups and downs of the economy.

If a bank sells a $1,000 security to the Fed and the required reserve ratio is 20 percent, _____

	a.	the bank has $1,000 in additional reserves, of which it can lend $800.
	b.	the bank has lost a liability.
	c.	the bank has $1,000 in additional reserves, of which it can lend $900.
	d.	the bank has lost an asset and must reduce its loans.
	e.	there is no change in excess reserves, since net assets do not change.

Problems with the federal government budget process include _____

	a.	the constitutional requirement of Congress to balance the budget on an annual basis.
	b.	a short review period for Congress that results in poor choices in funding programs.
	c.	Congress having too much control over the budgetary process.
	d.	an overly detailed budget that allows Congress to reward friends, thereby discouraging restraint on spending.
	e.	tough choices to be made by Congress each year on which entitlement programs will receive full support.

Answer 1

2. The correct answer is C. Attracting deposits from saver and lend to borrowers.

3. The correct answer is e. 70.

Because labour force = workers already employee + workers who are searching job. So labour force = 60 + 10 = 70.

4. The correct answer is C. Is the deliberate manupulation of government purchases, transfer payment and taxes to promote macroeconomic goals.

Because fiscal policy refers to a policy in which government increase it's spendings and decrease in tax rate to stimulate the economy of the country.

5.the correct answer is a) the bank has $1000 additional reserves and it can lend $800.

Because fed purchase the security from bank under open market operations which increase the reserve of the bank and able to lend all money after deducting reserve required ratio.