As a general rule, over the last few decades
a. the government has run deficits far more often than it has generated surpluses
b. the government has generated surpluses far more often than it has run deficits
c. the government has run surpluses about as often as it has run deficits
d. none of the above is true
Answer:
The great portion of Federal Reserve open market operations
a. are defensive in nature
b. are dynamic in nature
c. are in long-term bonds
d. are triggered by developments in inflation and unemployment
Answer:
The largest and most important class of financial intermediary is
a. banks
b. insurance companies
c. money market mutual funds
d. finance companies
Answer:
The federal debt or the national debt:
a. is so large that it may never be controllable
b. is the sum of all past budget deficits less the sum of all past budget surpluses
c. has few important economic ramifications
d. is less than $1 trillion in the United States
Answer:
To be considered highly liquid, an asset must:
a. be sellable without substantial transactions costs
b. be easily convertible to the medium of exchange
c. not fluctuate sharply in value
d. exhibit all of the above qualities
Answer:
In terms of our money supply multiplier framework, the chief factors explaining the
low level of the money supply during 1931-1934 were
a. the increase in k and rr
b. the increase in k and re
c. the increase in rr and re
d. none of the above
Answer:
One of the advantages of fiat money over full-bodied or commodity money is that:
a. its quantity can be controlled by human decision
b. it is more expensive to produce, thus limiting its quantity
c. it is less likely to be associated with inflation
d. all of the above are advantages of fiat money
Answer:
The primary legislation deregulating the thrift industry was
a. DIDMCA
b. FDICIA
c. FIRREA
d. Garn-St. Germain
Answer:
A hospital manager who is paid on the first of each month gets a raise from $36,000 to
$72,000 per year. She continues to spend all of her income evenly throughout the year.
The raise in her pay will cause her velocity to
a. remain unchanged
b. rise
c. fall
d. not enough information is given to answer the question
Answer:
The WWII era, as is true of most wartime efforts, was one of
a. strongly increasing aggregate demand
b. strongly increasing aggregate supply
c. decreasing aggregate demand
d. decreasing aggregate supply
Answer:
The majority position on the Governing Council of the ECB is held by
a. the Executive Board
b. the FOMC
c. the Governors
d. the members of ECOFIN
Answer:
Of the 17 business recessions between 1910 and 1994, the text points out that at least
some portion of the yield curve was downward sloping in the preceding year:
a. in all 17 instances
b. in 13 of the 17 instances
c. in 9 of the 17 instances
d. in 4 of the 17 instances
Answer:
Which of the following has the least potential influence over the money multiplier?
a. k
b. re
c. rr
d. all of the above have equal potential influence
Answer:
The liquidity premium theory of term structure:
a. assumes that rates on long-term bonds are determined independently of short-term
rates
b. asserts that long-term rates are the average of successive expected short-term rates
c. assumes that bonds of different maturities are not perfect substitutes
d. none of the above
Answer:
The “equity risk premium anomaly” refers to the fact that
a. stock prices outperform gold and real estate
b. stock prices outperform safer bond prices
c. stock prices have increased faster than the nation’s GDP
d. stocks outperform bonds by a larger amount than justified by risk
Answer:
The European Central Bank conducts monetary policy for
a. all European nations
b. all members of the European Union (EU)
c. all members of the Economic and Monetary Union (EMU)
d. none of the above
Answer:
An increase in taxes goes into effect in January. By September consumers reduce
spending as a result of the tax increase. This is an example of the
a. impact lag
b. implementation lag
c. recognition lag
d. none of the above
Answer:
Commercial banks have the power to create all of the following except
a. money
b. reserves
c. demand deposits
d. banks can create all of the above
Answer:
If the current U.S./U.K. exchange rate is 1.5 $/pound, then the exchange rate can also
be said to be
a. 3 pounds/$
b. 0.66 pounds/$
c. 1.66 pounds/$
d. 1.5 pounds/$
Answer:
If Ricardian Equivalence is true,
a. government budget deficits will cause interest rates to fall
b. government budget deficits will cause interest rates to rise
c. government budget deficits will have no effect on interest rates
d. none of the above
Answer:
Monetary policy is said to be ____ if the central bank’s actions and intentions are easily
observed and understood.
a. accountable
b. countercyclical
c. credible
d. transparent
Answer:
Which of the following is not an ultimate goal of Fed policy?
a. long-run growth in real GDP per capita
b. maintaining a stable trend in money growth
c. price level stability
d. all of the above are ultimate goals of policy
Answer:
Over the past century, the long-run trend behavior of velocity has displayed
a. a consistent downward trend
b. a V-shaped pattern
c. a consistent upward trend
d. an inverted V-shaped pattern
Answer:
A major reduction in the U.S. federal budget deficit, other things being equal, would
most likely
a. raise interest rates and reduce the U.S. trade deficit
b. reduce the capital inflow and increase the U.S. trade deficit
c. reduce the capital inflow and reduce the U.S. trade deficit
d. reduce the trade deficit and attract increased foreign capital
Answer:
Discussion of a single central bank for Europe began in hopes of eliminating
a. tariffs among European countries
b. restrictions on labor migration across European countries
c. passport controls among European countries
d. all of the above
Answer:
When the Bank of the United States’s charter expired, there was considerable opposition
to its renewal because
a. opponents claimed it favored rural interests above industry
b. opponents claimed it transferred funds from rural to urban areas
c. sentiment favored national banks over state-chartered banks
d. all of the above are true
Answer:
Suppose that market yields increase one percentage point across the board (all
maturities). Then the largest price declines will be experienced in:
a. 30-year Treasury bonds
b. 15-year corporate bonds
c. 5-year Treasury notes
d. 90-day Treasury bills
Answer:
The period 1929-1933 may be characterized as a period of
a. severe inflation (more than 3 percent per year)
b. severe deflation (more than 3 percent per year)
c. mild inflation (less than 3 percent per year)
d. mild deflation (less than 3 percent per year)
Answer:
If the current yield and the yield to maturity on a bond are identical, then:
a. the bond is selling at a premium to face value
b. the bond is selling at face value
c. the bond is selling at a discount from face value
d. insufficient information is given to answer the question
Answer:
When the Fed aggressively purchases securities in the open market,
a. security prices rise
b. market interest rates decrease
c. bank reserves, the base, and the money supply increase
d. all of the above occur
Answer:
Stock market returns have often been negative
a. over 2-year horizons
b. over 10-year horizons
c. over 30-year horizons
d. over all of the above horizons
Answer:
Which of the following is not an empirical regularity associated with the term structure
of interest rates?
a. changes at the short-term end of the yield curve are typically larger in magnitude than
changes at the long-term end
b. the yield curve tends to be upward sloping at the beginning of expansions
c. when the yield curve changes, it generally rotates rather than moving up or down
d. the yield curve is upward sloping most of the time
Answer:
Which of the following potential intermediate monetary policy target variables scores
highest on the criterion of measurability?
a. the monetary base
b. monetary aggregates
c. nominal short-term interest rates
d. real short-term interest rates
Answer:
Technically, the Federal Reserve is owned by
a. the International Monetary Fund
b. U.S. taxpayers
c. the U.S. Treasury
d. none of the above
Answer: