The Taylor rule helps explain the relationship between the Fed’s ________ and
________.
A) money supply target; economic conditions
B) money supply target; the federal funds target
C) federal funds target; the monetary growth rule
D) federal funds target; economic conditions
Under the Patient Protection and Affordable Care Act (ACA), every company with
more than 200 employees must offer health insurance to its employees and must
automatically enroll them in the plan.
China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan was
________ at the pegged exchange rate, the level of Chinese exports remained ________
than they would have been if the exchange rate were allowed to float freely.
A) undervalued; higher
B) undervalued; lower
C) overvalued; higher
D) overvalued; lower
Suppose that when the price of oranges decreases, the Sarita decreases her purchases of
peaches. To Sarita,
A) oranges and peaches are complements.
B) oranges and peaches are inferior goods.
C) oranges and peaches are normal goods.
D) oranges and peaches are substitutes.
The proponents of ________ and ________ think that the Federal Reserve should adopt
a constant monetary growth rule.
A) new Keynesianism; the new classical model
B) the real business cycle model; Marxism
C) rational expectations; monetarism
D) the monetarist model; the Keynesian model
What impact does a decrease in the price level in the United States have on net exports
and why?
A) A decrease in the price level increases net exports because lower prices increase the
value of the dollar.
B) A decrease in the price level increases net exports by reducing the relative cost of
American goods.
C) A decrease in the price level reduces net exports because lower prices raise the value
of the dollar.
D) A decrease in the price level reduces net exports because lower prices increase
American spending on imports.
Which of the following policies would not help promote economic growth?
A) a law requiring that the funds in an individual retirement account be taxed
B) a law restricting elected officials from accepting expensive gifts and trips from
private individuals
C) a law that funds prenatal care for all expectant mothers
D) a law that subsidizes research in nanotechnology
Fluctuating exchange rates can alter a multinational firm’s profits and losses. German
auto maker Volkswagen produces automobiles in Germany and sells them in the United
States. If the dollar depreciates against the euro, then Volkswagen’s revenues from these
operations should ________ because it will take ________ U.S. dollars to purchase the
German-made Volkswagens.
A) rise; more
B) rise; fewer
C) fall; more
D) fall; fewer
Which of the following is not a reason why the U.S. economy has been more stable
since 1950?
A) Goods have become a larger fraction of GDP and services have become a smaller
fraction of GDP.
B) The government has actively pursued policy to combat recessions and prolong
expansions.
C) Unemployment insurance and other government programs curtail the decline in
spending that occurs during a recession.
D) Services have become a larger fraction of GDP and goods have become a smaller
fraction of GDP.
Banks can continue to make loans until their
A) actual reserves equal their required reserves.
B) excess reserves equal their required reserves.
C) actual reserves equal their excess reserves.
D) actual reserves equal their checking account balances.