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1) Everything else held constant, a decrease in the currency-checkable deposit ratio will
mean
A) an increase in currency in circulation and an increase in the money supply
B) an increase in money supply
C) a decrease in the money supply
D) an increase in currency in circulation but no change in the money supply
2) The Chairman of the Board of Governors is chosen from among the seven governors
and serves a ________ term
A) one-year
B) two-year
C) four-year
D) eight-year
3) In the long-run ISLM model and with everything else held constant, the long-run
effect of an autonomous increase in investment is to ________ real output and
________ the interest rate
A) increase; increase
B) increase; not change
C) not change; increase
D) not change; decrease
4) When the interest rate on a bond is ________ the equilibrium interest rate, in the
bond market there is excess ________ and the interest rate will ________
A) above; demand; rise
B) above; demand; fall
C) below; supply; fall
D) above; supply; rise
5) Which of the followings does not shift the short-run aggregate supply curve?
A) supply shocks
B) persistent positive output gap
C) changes in expected inflation
D) an increase in output gap
6) An emerging market country that successfully used exchange-rate targeting to lower
its inflation from above 100 percent in 1988 to below 10 percent in 1994 (before
devaluation) was
A) Thailand
B) Mexico
C) The Philippines
D) Indonesia
7) When a corporation announces a major decline in earnings, the stock price may
initially decline significantly and then rise back to normal levels over the next few
weeks This impact is called
A) the January effect
B) mean reversion
C) market overreaction
D) the small-firm effect
8) The Depository Institutions Deregulation and Monetary Control Act of 1980
A) separated investment banks and commercial banks
B) restricted the use of ATS accounts
C) imposed restrictive usury ceilings on large agricultural loans
D) increased deposit insurance from $40,000 to $100,000
9) Assuming initially that rr = 10%, c = 40%, and e = 0, an decrease in c to 30% causes
the M1 money multiplier to ________, everything else held constant
A) increase from 28 to 325
B) decrease from 325 to 28
C) increase from 28 to 35
D) decrease from 35 to 28
10) Everything else held constant, if the expected return on US Treasury bonds falls
from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent, then
the expected return of holding GE stock ________ relative to US Treasury bonds and
the demand for GE stock ________
A) rises; rises
B) rises; falls
C) falls; rises
D) falls; falls
