Vault Cash Is Not Included in the Central Bank's Liability

question 47

Multiple Choice

Vault cash is not included in the central bank's liability category of currency because:

• A)Only non-bank currency is in the liability category of currency
• B)Vault cash really is only electronic funds
• C)Vault cash is in the asset category of reserves
• D)It is the liability of the U.S.Treasury

Understand the factors contributing to federal deficits and their implications on U.S. GDP.

Comprehend the concepts of crowding in and crowding out in the context of fiscal policy and private investment.

Recognize the effect of fiscal policies on national saving, interest rates, and investment.

Analyze the impact of automatic stabilizers on budget deficits.

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Definitions:

Interest

The cost of borrowing money, expressed as a percentage, paid by the borrower to the lender for the use of the lender's money.

Present Value

Today's value of a future monetary amount or cash flow series, calculated with a designated rate of return.

Interest Rate

The cost of borrowing money or the return on investment for savings, usually expressed as a percentage.

Utility Function

A mathematical representation of how different quantities of goods or services increase a consumer's satisfaction or happiness.