The document is a study guide containing questions about macroeconomic concepts related to fiscal and monetary policy, government budgets, debt, and central banking. It tests understanding of topics like the federal budget balance, cyclically adjusted budget balance, debt-to-GDP ratio, crowding out effect, and tools of monetary policy like open market operations and the federal funds rate.

1. Modules 30 and 31
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2. Click here for Final Jeo

3. Long-Run Monetary Monetary Monetary
The Budget Implications Policy
of and the
Policy Policy
Balance
Fiscal Policy Interest Rate and AD in Practice
10 Point 10 Point 10 Point 10 Point 10 Point
20 Points 20 Points 20 Points 20 Points 20 Points
30 Points 30 Points 30 Points 30 Points 30 Points
40 Points 40 Points 40 Points 40 Points 40 Points
50 Points 50 Points 50 Points 50 Points 50 Points

4. A negative budget
balance.

5. What is a deficit?

6. The difference between the
government’s tax revenues,
and its spending on goods
and services plus
government transfers in a
given year.

7. What is a budget
balance?

8. The year the US
federal government
ran a record budget
surplus.

9. What was 2000?

10. When revenues
equal spending in a
fiscal year.

11. What is a balanced
budget?

12. An estimate of what the
budget balance would be
if there were neither a
recessionary nor an
inflationary gap.

13. What is a cyclically
adjusted budget
balance?

14. A measure used to
assess the ability of
governments to
repay their debt.

15. What is the debt-
GDP ratio?

16. When a government
stops paying what it
owes.

17. What is default on
the debt?

18. Government debt
held by individuals
and institutions
outside the
government.

19. What is the public
debt?

20. When government
“competes” with
firms to borrow
funds.

21. What is “crowding
out”?

22. Spending promises made
by government that are
effectively a debt, despite
the fact that they are not
included in the debt
statistics.

23. What are implicit
liabilities?

24. Every 6 weeks they
meet to decide on
the interest rate to
prevail in the
economy.

25. What are the Federal
Open Market
Committee?

26. What a reduction in
the money supply
will do to the interest
rate.

27. What is increase the
interest rate?

28. Operations to
increase or reduce
the money supply.

29. What are open-
market operations?

30. The interest rate that
is targeted through
monetary policy.

31. What is the federal
funds rate?

32. The three tools of
monetary policy.

33. What are the required
reserve ratio, the
discount window and the
open market operations?

34. This results after the Fed
increases the money
supply, causing the
interest rate to fall, and
investment to increase.

35. What is a rise in real
GDP?

36. This monetary
policy shifts AD to
the right.

37. What is
expansionary
monetary policy?

38. This monetary
policy shifts AD to
the left.

39. What is
contractionary
monetary policy?

40. What the aggregate
price level does after
the Fed enacts
expansionary
monetary policy.

41. What is increase?

42. AD will move in this
direction when the
Fed reduces the
money supply.

43. What is to the left?

44. The percentage
difference between
actual real GDP and
potential output.

45. What is the output
gap?

46. Policy makers fight
recessions and try to
ensure this.

47. What is price
stability?

48. A rule for setting the
federal funds rate that
takes into account the
inflation rate and the
output gap.

49. What is the Taylor
Rule?

50. When the central bank
sets an explicit value for
the inflation rate and
enacts monetary policy
in order to hit this value.

51. What is inflation
targeting?

52. The two main
advantages of
inflation targeting.

53. What are
transparency and
accountability?

54. Make your wager

55. The Taylor Rule
equation.

56. What is the federal funds
rate should equal 1 +
(1.5*inflation rate) +
(0.5*output gap)?