Final Exam Honors Economics

the function of money that allows it to express worth in understandable terms

measure of value

the lack of a central bank in the 19th Century US meant there were few ways to control the money supply. This led to

Periodic liquidity crises called panics, and bank failures

To decrease the money supply, the Fed Open Market Committee would

Sell treasury Bills to the Banks

To increase the regional money supply, a Regional Federal Reserve Bank could

Lower the Reserve Requirement to banks in their region

(True or False)To combat inflation, the Federal Reserve would used an expansionary monetary policy

False

Who is the current Chairman of the Federal Reserve

Jerome Powell

To help banks maintain seasonal liquidity, the Fed provides short term loans through

The Discount Window

Fiscal policy, which also affects the money supply is

Government taxing and spending

Who owns the Federal Reserve Bank

All of the member banks which own stock in the Fed

What is specie

Gold and silver coins

Which characteristic of money affects its value

supply

The first nationally issued paper currency creaetd by Congress during the Civil War

Greenbacks

How many types of currency circulated in the US prior to the Civil War

10,000

Prior to the Civil War, who issued currency in the United States

Private State Banks

The function of money that allows it to be accepted as payment

medium of exchange

The function of money that allows purchasing power to be saved until needed

store of value

All of the following are true about the National Bank System or NBS except

The NBS acted as the central bank of the United States

By the turn of the 20th Century, what weakness was evident in the National Bank System

It could not adequately control the money supply leading to panics

What is financial Panic?

A financial depression caused by a currency shortage

Which of the following is not a reason for the creation of the Federal Reserve Bank in 1913

Invest Federal revenues in banking securities

Why do the 7 members of the Federal Reserve Board of Governors serve 14 year terms

To insulate them from day-to-day politics and the election cycle

Why are the Board of Governors’ terms staggered so one is replaced every 2 years

so that only 2 can be replaced by any 1 president

Which is not a major role of the Fed Board of Governors

Supply currency to commercial banks

A rush be depositors to withdraw funds before a bank fails

Bank Run

Why were US Banks severely overextended when the stock market crashed on 10/29/1929

Heavily speculated in the stock market with depositor’s funds

(True or False)Between 1929 and 1934, about 5,000 banks failed in the United States

False

Which was not a provision of the Banking Act of 1933

Commercial banks required to keep reserves in the Federal Reserve Bank

What is the purpose of the Federal Deposit Insurance Corporation

Protect depositors funds in case of a bank failure

Currency held in a bank and their deposits in the Federal Reserve Bank

Legal Reserve

Deposits a bank keeps in the Federal Reserve

Member Bank Reserve

Used to calculate how much a bank must keep on in reserves

Reserve Requirement

A bank must keep a part of deposits on reserve but may loan out the rest

Fractional Reserve

Cash not needed to meet reserve requirements

Excess Reserves

How does an expansionary monetary poligy affect the cost and availability of credit?

Lowers interest rates and increases access to credit

How does a contractionary monetary policy affect the cost and availability of credit

Raises interest rates and decreases access to credit

What is the Dual Mandate of the Federal Reserve

Maximum Employment and 2% Long-term inflation

(True or False)The Fed’s most often used tool to control the money supply is Open Market Operations

True

Open Market Operations, the Fed buys government bonds from bank & deposits money into bank accounts the result is

larger money supply and lower interest rates

A bank that takes deposits, operates checking and savings accounts, and makes loans

Commercial Bank

A bank that facilitates mergers, sell securities, manages hedge funds, and organized stock IPOs

Investment Bank

This controls the money supply, regulates commercial banks and stabilizes national economic and financial systems

Central Bank

In Open Market Operations, when the Fed sells government bonds to banks and takes the money out of the banks

Smaller money supply and higher interest rates

Currently the FDIC insures each depositor in an institution for

$250,000

(True or False)When the FDIC was first founded in 1933, it insured each depositor up to $2500.00

True

(True or False) The first national currency issued by the United States was the Federal Reserve Note

False

Organization of workers who do the same kind of work

Trade Union

Organized by management to prevent a worker’s organization from forming

Company Union

Workers stop working to pressure a company into making concessions

Strike

Workers demonstrating outside the premises of a company to inform the public of unfair conditions

Pickett

Company prevents workers from working to force them to make conessions

Lockout

Workers promise to never join a union as a condition of employment

Yellow Dog Contract

THe inability of women and minorities to gain promotion or raises in a workplace

Glass Ceiling

A refusal to buy a company’s goods as a way of forcing the company to make concessions

Boycott

A wage or benefit reduction that labor concedes to a company to prevent job losses

Give back

Organization of workers who do different jobs in the same workplace

Industrial Union

The National Labor Relations Act foes which of the following

ensures fair elections for unions and recognition of unions by companies

The first minimum wage in the United States was established by which of the following law

Tne Fair Labor Standards Act of 1938

Elections to form unions are overseen by which of the following

The National Labor Relations Board

Which of the following were outcomes of the Anthracite Strike of 1902

9 hour work day

10% increase in wages

positve public,legal, and political opinion of labor unions

Creation of a 6 member arbitration board to settle differences between a labor and management

Corruption and organized crime within unions resulted in this law being passed by Congress

The Labor-Management Reporting and Disclosure Act

In 1886, a number of trade unioons joined to form this national umbrella organization

American Federation of Labor

Why did president Theodore Roosevelt feel that he was justified in interbening in the Anthracite Coal Strike of 1902

The coal shortage was a public safety and national security issue

Negotiating for pay, working conditions, and benefits for all of the workers in a workplace.

Collective bargaining

The Congress of Industrial Organizations was founded by

John L. Lewis

How much was the hourly rate for the minimum wage in the United States

.25

Which of the following best describes the work arrangement known as a “closed shop”

Workers must be members of the union to get hired by the employer

Which of the following does NOT contribute to the Gender Income Gap?

Women are prevented from joining the highest paid professions

He led the United Mine Workers of America through the Bituminous Coal Strike of 1987 and the Anthracite Coal Strike of 1902

John Mitchell

This law established the 40 hour workweek, overtime, and set the minimum work age of 16 for many jobs

The Fair Labor Standard Act

Which of the following statements about the minimum wage is not true

The federal minimum wage has gone up regularly since 2009

which of the following contributed to the rise of the industrial labor movement in the United States after 1860

Dangerous and unhealthy working conditions

Increasing numbers of industrial factory workers

Low pay and long hours

Which of the following are reasons for the decline of union influence since the 1940s

Women and younger workers tend not to join unions

Companies have improved pay and benefits to keep workers happy

Unions have been “too successful”: higher costs of union labor

The Pennsylvannia Motor Fuels Tax for Gasoline for 2023 is how much per gallon?

$.61

Why is the United States Income Tax considered to be a pogressive tax?

The tax rate increases as income increases

What is the purpose of the IRS Form W4

Employers use it to determine the amount of tax to with hold from employee’s paychecks

What is the purpose of the IRS Form W2

Employers use it to report wages and taxes to employees

The sales tax rate for Pennsylvannia is

6%

Which of the following are exempted from states sales tax in Pennsylvania

Most Clothing

Pharmaceuticals

Textbooks

Unprepared Food

If you had a lottery winnings or casino gambing winnings, they would be reported as taxable income on

1099 MISC

If you work in the gig economy as an independent contractor, your earnings will be reported on which of the following 1099 form

1099 NEC

What is self employment tax

The employer contribution plus the employee contribution to social security and medicare

Income from diidends and interest on stocks and bank accounts is subject to income tax and self employment tax

false

Social Security payroll tx is paid by both the employer and the employee

True

If your withholding is too low and not enough income taxes are taken out you wil have to

pay the taxes plus an underpayment penalty when your file your taxes by April 15

You have a spouse and two children. How many allowances do you have for withholding purposes?

4

The IRS Form 1040 is used for

Filing the individual income tax

The Pennsylvannia State Individual Income Tax

Is a flat tax of %3.07 on all income

Taxpayer can deduct the amount of earnings put into a retirement account from their social security and medicare wages to reduce their tax burden

False

If the people were entirely rational they would consistently ____ when given identical options, but sometimes people’s preferences are dependent on _ *Psychologists call this type of cognitive bias the _*

make sane decisions, how options are presented, framing effect

___ is a concept that argues encourages people to act a certain way without actually changing their choices

Nudge Theory

____ is the Idea that people strongly want to avoid losing. Studies show that, in general, losses are more _ *than gains are* _

Loss aversion, painful, pleasureable