1) An expansionary monetary policy raises firms’ cash flows by ________ interest rates
A) lowering real
B) lowering nominal
C) raising real
D) raising nominal
2) Members of the Executive Board of the European System of Central Banks are
appointed to ________ year, nonrenewable terms
A) four
B) eight
C) ten
D) fourteen
3) The Federal Open Market Committee usually meets ________ times a year
A) four
B) six
C) eight
D) twelve
4) Although the Fed professed employment of ________ targeting during the 1970s, its
behavior suggests that it emphasized ________ targeting
A) free-reserve; interest-rate
B) interest-rate; monetary aggregate
C) monetary aggregate; interest-rate
D) free reserve; monetary aggregate
5) The Federal Open Market Committee consists of the
A) five senior members of the seven-member Board of Governors
B) seven members of the Board of Governors and seven presidents of the regional Fed
banks
C) seven members of the Board of Governors and five presidents of the regional Fed
banks
D) twelve regional Fed bank presidents and the chairman of the Board of Governors
6) During the 1950s, the Fed targeted
A) M1
B) M2
C) the monetary base
D) money market conditions
7) Factors that decrease the demand for bonds include
A) an increase in the volatility of stock prices
B) a decrease in the expected returns on stocks
C) a decrease in the inflation rate
D) a decrease in the riskiness of stocks
8) Banks can lower the cost of information production by applying one information
resource to many different services This process is called
A) economies of scale
B) asset transformation
C) economies of scope
D) asymmetric information
9) The central bank which is generally regarded as the most independent in the world
because its charter cannot be changed by legislation is the
A) Bank of England
B) Bank of Canada
C) European Central Bank
D) Bank of Japan
10) If the consumption function is expressed as C = a + mpc YD, then “a” represents
A) autonomous consumer expenditure
B) the marginal propensity to consume
C) the expenditure multiplier
D) disposable income
11) Assuming the same coupon rate and maturity length, the difference between the
yield on a Treasury Inflation Protected Security and the yield on a nonindexed Treasury
security provides insight into
A) the nominal interest rate
B) the real interest rate
C) the nominal exchange rate
D) the expected inflation rate
12) If the economy is characterized by a certain and stable LM curve, then ________
target produces ________ fluctuations in aggregate output
A) an interest rate; smaller
B) a money supply; smaller
C) a money supply; larger
D) an exchange rate; larger
13) When a country forgoes its own currency and starts using another country’s
currency as its own, we say that this country has
A) created a currency board
B) undergone dollarization
C) adopted a managed exchange system
D) adopted an exchange rate monetary system