How many of the U.S. economic downturns since 1929 have been characterized by
deflation?
a. none
b. one
c. five
d. most
Answer:
International comparisons of CPI price inflation rates show that, during 1970 – 1990,
a. the United States had the highest inflation in the world
b. the United States had higher inflation than both Germany and Japan
c. the United States had among the highest rates of inflation in the world
d. none of the above is correct
Answer:
Since the early 1970s, foreign exchange rates have been:
a. floating, with occasional government intervention
b. freely floating, without government intervention
c. fixed by government intervention
d. none of the above
Answer:
Which of the following tends to boost the currency ratio?
a. higher interest rates payable on DDO
b. lower income tax rates
c. migration from urban to rural areas
d. none of the above
Answer:
The bulk of the profits earned by the Fed are remitted to the ____; the bulk of the
profits earned by the ECB are remitted to the ____.
a. Treasury; EU General Fund
b. individual district banks; EMU member nations’ central banks
c. commercial banks that are members of the Fed; EU General Fund
d. Treasury; EMU member nations’ central banks
Answer:
Monetary policy does not influence which of the following?
a. the supply of money
b. the availability of credit
c. the level of interest rates
d. the velocity of the money supply
Answer:
In the weeks following a decrease in reserve requirements, we would expect to see
a. the monetary base increase
b. the money supply rise
c. bank reserves increase
d. all of the above
Answer:
Bank holding companies are supervised by
a. the Comptroller of the Currency
b. the Federal Reserve
c. the FDIC
d. state banking agencies
Answer:
The monetary base can be expressed as
a. Fb + Cb + Cp
b. M1/R
c. R + Cb
d. none of the above
Answer:
Compared to other industrialized nations, the U.S. has relatively
a. fewer but bigger banks
b. fewer and smaller banks
c. more but smaller banks
d. more and bigger banks
Answer:
From the 1999-2000 highs to the 2001-2002 lows, which stock market index exhibited
the relatively largest decline?
a. NASDAQ
b. Russell 2000
c. The TECH 400
d. S&P 500
Answer:
Over short time horizons, the Fed is most capable of accurately controlling
a. B
b. m
c. M
d. all of the above
Answer:
In the short run,
a. the unemployment rate can be above the natural rate of unemployment
b. the unemployment rate can be below the natural rate of unemployment
c. the unemployment rate can be equal to the natural rate of unemployment
d. all of the above are possible
Answer:
A U.S. Treasury bill with 90 days to maturity sells at $990 (face value = $1,000) Its
discount rate is:
a. 10 percent
b. 6 percent
c. 4 percent
d. 1 percent
Answer:
Which of the following is listed on the asset side of the Federal Reserve balance sheet?
a. items denominated in foreign currencies
b. deposits of the U.S. Treasury
c. Federal Reserve notes
d. all of the above
Answer:
If YN is the natural or full-employment output level and YE1 is a nation’s equilibrium
level of output, an inflationary gap exists when
a. YE1 > YN
b. YE1 < YN
c. YE1 = YN
d. None of the above is correct.
Answer:
In the money view,
a. one need only look at the liability side of the bank balance sheet to predict the impact
of monetary policy–bank securities purchases and loans have equal power
b. securities purchases by banks have a stronger impact on the economy than new bank
loans do
c. securities purchases by banks have less power over economic activity than new bank
loans do
d. none of the above is true
Answer:
The nonborrowed base
a. is calculated by subtracting borrowed reserves (discount loans) from the monetary
base
b. is a generally ineffective operating target because it is too “endogenous”
c. is accurately described by both of the above
d. is accurately described by neither of the above
Answer:
The approximate magnitude of the M1 money supply in the United States is
a. $1 million
b. $1 billion
c. $1 trillion
d. $100 trillion
Answer:
Whenever banks collectively purchase securities from dealers
a. the money supply rises
b. the money supply falls
c. aggregate reserves rise
d. aggregate reserves fall
Answer:
Assuming that the inflation rate is positive, which of the following statements
characterizes the relationship between the actual or observed interest rate and the real
interest rate?
a. Real interest rates are lower than actual interest rates.
b. Real interest rates are higher than actual interest rates.
c. They are equal.
d. None of the above is necessarily true.
Answer:
Over the past 45 years, we have witnessed shifts in the importance and market share of
the various types of intermediaries. Which of the following statements best describes
these shifts?
a. investment intermediaries have become more important; depository institutions have
become less important
b. contractual savings institutions have become less important; depository institutions
have become more important
c. contractual intermediaries have become less important; investment intermediaries
have become more important
d. depository institutions have become less important; investment intermediaries have
become more important
Answer:
The amount by which actual output falls short of full employment output is known as
a. the inflationary gap
b. the output shortage
c. the rate of involuntary unemployment
d. the recessionary gap
Answer:
Open market operations by the Fed
a. consist of buying and selling of government securities
b. are designed to influence bank lending
c. are designed to influence interest rates
d. do all of the above
Answer:
Among investment intermediaries, which held the most in total assets as of 2003?
a. commercial banks
b. money market mutual funds
c. mutual funds
d. finance companies
Answer:
In Tobin’s q theory, monetary policy actions influence the investment decision by
a. increasing interest rates
b. increasing stock prices
c. both of the above
d. neither of the above
Answer:
A sharp increase in Treasury bill yields should cause
a. a decrease in the monetary base
b. a decrease in the money supply multiplier
c. a decrease in the desired excess reserve ratio
d. none of the above
Answer:
The supply shocks of the 1970s were caused primarily by
a. a strong union push to raise wages
b. a collapse in the supply of steel
c. rapid increases in oil and energy prices
d. rapid depreciation of the capital stock
Answer:
The use of a commodity as money does not depend on its:
a. velocity
b. scarcity
c. portability
d. durability
Answer:
The Federal Reserve may have difficulty controlling the money supply if
a. the base cannot be accurately controlled
b. the multiplier is unstable and unpredictable
c. the multiplier systematically moves inversely with the base
d. any or all of the above occur
Answer: