In 1965, Gordon Moore predicted that the number of transistors in a chip would double
approximately every
A) 6-12 months.
B) 18-24 months.
C) five years.
D) 10 years.
E) none of the above
Which of the following would cause an increase in human wealth?
A) a permanent increase in salary
B) an increase in the value of one’s house
C) an increase in the value of one’s stock portfolio
D) all of the above
E) none of the above
After Britain returned to the Gold Standard in the 1920s, the British pound was
A) undervalued, contributing to a long period of inflation.
B) undervalued, contributing to a long period of recession.
C) overvalued, contributing to a long period of inflation.
D) overvalued, contributing to a long period of recession.
E) value about right, leading to a long period healthy growth with almost no inflation.
A “conservative” central banker cares
A) less about inflation and more about unemployment than the government.
B) more about economic growth and less about inflation.
C) more about inflation and less about unemployment than the government.
D) less about economic growth and more about inflation.
The length of time over which a bond promises to make payments to the holder is
called which of the following?
A) the term structure of interest rates
B) the face value
C) the yield to maturity
D) the holding period
E) none of the above
Assume the interest parity condition holds and that initially i = i*. A reduction in the
foreign interest rate (i*) will cause
A) an increase in the demand for the domestic currency.
B) an increase in E.
C) an expected depreciation of the domestic currency.
D) all of the above
Suppose country A pegs its nominal exchange rate to country B and that country A has a
lower inflation rate than country B. In this situation, country A will experience
A) a real depreciation.
B) a better trade position.
C) a reduction in the real exchange rate.
D) all of the above
E) none of the above
Refer to the information above. Which of the following represents the level of
investment needed to maintain a constant capital stock (K) in this economy?
A) .02K
B) .03K
C) .05K
D) .10K
E) .15K
For this question, assume that the economy is initially operating at the natural level of
output. A monetary expansion will cause
A) no change in the real wage in the medium run.
B) an increase in investment in the medium run.
C) a reduction in the interest rate in the medium run.
D) no change in the nominal wage in the medium run.
Suppose that the rest of the world experiences an economic boom causing an increase
in foreign output (Y*). This increase in Y* will not cause which of the following to
occur?
A) the domestic country’s output to increase
B) the domestic country’s consumption to increase
C) the domestic country’s output to increase and its trade balance to worsen as imports
increase
D) all of the above
E) none of the above
Since the end of 2008, the Federal Reserve has adopted an unconventional monetary
tool called
A) quantitative easing.
B) open market operation.
C) change required reserve ratio.
D) discount loan.
The new European Central Bank is located in which country?
A) England
B) Italy
C) France
D) Spain
E) Germany
Suppose policy makers implement a fiscal expansion that is not fully anticipated by
financial market participants. We know that this will
A) always cause stock prices to fall.
B) always cause stock prices to rise.
C) tend to cause stock prices to rise if the LM curve is very flat.
D) tend to cause stock prices to rise if the LM curve is vertical.
A country which does not devalue when financial markets expect it to will probably
suffer
A) a real appreciation of its currency.
B) higher interest rates.
C) a default on its national debt.
D) all of the above
E) none of the above
In the medium run, a tax cut that causes an increase in the budget deficit will affect
which of the following?
A) the level of output but not its composition
B) both the level and composition of output
C) only the composition of output
D) only the price level
E) none of the above
When inflation has not been very persistent, as was the case in the United States before
the mid-1960s, we can expect that
A) the expected price level for a given year will equal the previous year’s actual price
level.
B) the current inflation rate will not depend heavily on past years’ inflation rates.
C) lower unemployment rates will be associated with higher inflation rates.
D) all of the above
E) none of the above
The discount rate represents the interest rate on
A) overnight loans between banks.
B) three-month U.S. securities.
C) municipal bonds.
D) one-year discount bonds.
E) none of the above
A reduction in the budget deficit can be reflected in
A) a reduction in private saving.
B) an increase in investment.
C) an increase in net exports.
D) all of the above
E) none of the above
An asset is considered liquid if it
A) can be used as a store of value.
B) has a guaranteed rate of return.
C) is indexed to the rate of inflation.
D) acts as a medium of exchange.
E) none of the above
Which of the following is not included in investment?
A) the purchase of new equipment by firms
B) nondurable goods
C) the purchase of a new home
D) none of the above
Contractionary monetary policy in a flexible exchange rate regime will cause
A) a shift of the IP curve.
B) a depreciation of the domestic currency.
C) an increase in E.
D) no change in E.
If output per capita grows by a constant 3% per year, then the standard of living would
grow by about ________ over 4 years.
A) 13%
B) 14%
C) 15%
D) 16%
E) 17%
Securitization is a process of asset transformation that involves a number of different
financial institutions working together. These financial institutions are known
collectively as the
A) transformers.
B) amalgamation.
C) movers and shakers.
D) shadow banking system.
Which of the following statements is false?
A) A bank’s assets are its uses of funds.
B) A bank issues liabilities to acquire funds.
C) The bank’s assets provide the bank with income.
D) Bank capital is recorded as an asset on the bank balance sheet.
As of 2009, what was the last year that U.S. experienced deflation?
A) 1933
B) 1955
C) 1973
D) 1991
E) 2001
Which of the following variables would not influence the ex-dividend price of a share
of stock at time t?
A) i1
e
t+1
B) i1t
C) $De
t+1
D) none of the above
Which of the following does not represent a form of debt finance?
A) bonds
B) loans
C) stock
D) all of the above
A real depreciation will tend to cause
A) a reduction in exports.
B) an increase in imports.
C) a reduction in net exports.
D) an increase in demand for domestic goods.
E) none of the above
The countries with the lowest output per capita
A) are rich with human capital, but have little physical capital.
B) are rich with physical capital, but have little human capital.
C) are poor in both human and physical capital.
D) have low living standards in spite of relatively high levels of both human and
physical capital.
E) may or may not be poor in human capital, depending on whether the exchange rate
or purchasing power parity method is used for comparison.
Whenever the expected inflation rate is positive
A) the real interest rate is greater than the nominal interest rate.
B) the real interest rate is negative.
C) the real interest rate is positive.
D) the nominal interest rate must be equal to the real interest rate.
E) none of the above
Suppose current government spending increases and that individuals expect future
government spending to increase. Given this information, in which of the following
cases will output in the current period be more likely to decrease?
A) Individuals consider only the short run effects of changes in future macro variables
when forming expectations of future output and future interest rates.
B) Individuals consider only the medium run effects of changes in future macro
variables when forming expectations of future output and future interest rates.
C) Individuals consider only the long run effects of changes in future macro variables
when forming expectations of future output and future interest rates.
D) The output effects will be the same in B and C.
Which of the following individuals is responsible for developing the life cycle theory of
consumption?
A) Friedman
B) Modigliani
C) Keynes
D) Lucas
For this question, assume that the saving rate increases. We know that this increase in
the saving rate will cause which of the following?
A) a temporary increase in the level of output per capita
B) no permanent change in the level of output per capita
C) a temporary increase in the rate of growth of output per capita
D) a permanently higher rate of growth of output per capita
E) none of the above
Suppose current sales increase by $100 million. Investment theory suggests that current
investment must
A) decrease exactly by $100 million.
B) increase by exactly $100 million.
C) increase by less than $100 million.
D) decrease, but by less than $100 million.
E) none of the above