As of the end of 1994 the country in our survey with the smallest stock market in dollar
terms was
A) the United States.
B) the United Kingdom.
C) Japan.
D) Germany.
The two major types of financial systems are the __________-oriented systems.
A) federal- and local
B) banking- and markets
C) securities- and equities
D) contributor- and stockholder
Which of the following investments offers fixed dividend payments?
A) Consols
B) Zero-coupon bonds
C) Preferred stock
D) Convertible stock
If the money supply is $1 trillion and the velocity of money is 5.0, nominal GDP is
__________.
A) $200 billion
B) $5 trillion
C) $500 billion
D) Cannot be determined from the information given.
A Keynesian forecast of economic growth next year is likely to focus on
A) money demand.
B) money supply.
C) velocity of money.
D) investment spending plans.
A characteristic of an efficient market is that
A) prices are equal for all securities.
B) bid-asked spreads are large.
C) prices reflect all available information.
D) all investors receive a positive rate of return.
Open market operations are
A) seldom used by the Federal Reserve because they have such a large impact on bank
Reserves.
B) seldom used by the Federal Reserve because they have little impact on bank
reserves.
C) used frequently by the Federal Reserve but not as often as changes in the discount
rate.
D) the primary method used by the Federal Reserve to alter bank reserves.
If the yield on long-term securities is greater than the yield on comparable short-term
securities, the yield curve will be
A) negatively sloped.
B) positively sloped.
C) in the negative quadrant.
D) undefined.
According to Classical economists, investment is __________ related to the
__________.
A) directly; interest rate
B) directly; level of GDP
C) inversely; interest rate
D) inversely; level of GDP
The velocity of M2 is equal to
A) M3 minus M1.
B) GDP divided by M2.
C) GDP multiplied by M2.
D) the velocity of M1.
During the 1980s, M1 doubled, and the price level increased about __________
percent.
A) 100
B) 60
C) 200
D) 300
The equilibrium price for a British pound is $1.60. At a price of $1.75 per British
pound, there would be excess __________ the dollar and the dollar would __________.
A) supply of; appreciate
B) supply of; depreciate
C) demand for; appreciate
D) demand for; depreciate
The newest fixed exchange rate system is the
A) European Monetary System.
B) euro in the European Union countries.
C) Bretton Woods system.
D) gold standard.
A speculator who feels strongly that short rates will be falling over the next few years
might want to be a __________ payer in a swap contract; if he is wrong there is
__________ downside risk.
A) fixed-rate; no
B) fixed-rate; considerable
C) floating-rate; no
D) floating-rate; considerable
Saver-lenders often choose to invest in financial intermediaries because the
intermediaries
A) reduce transactions costs for saver-lenders.
B) increase risk by diversification.
C) produce information on saver-lenders.
D) engage in direct finance.
The BLS monthly household survey involves about __________ households in the
United States.
A) 6,000
B) 60,000
C) 600,000
D) 6,000,000
Importing a foreign good increases the __________ the foreign currency and increases
the __________ the currency of the importing country in the foreign exchange market.
A) demand for; demand for
B) demand for; supply of
C) supply of; demand for
D) supply of; supply of
Most municipal bonds are
A) general obligation bonds.
B) revenue bonds.
C) callable bonds.
D) single maturity bonds.
A household survey is used to calculate
A) the unemployment rate.
B) the level of payroll employment.
C) both the unemployment rate and the level of payroll employment.
D) neither the unemployment rate nor the level of payroll employment.
Reserve targets and federal funds targets are compatible when the Federal Reserve
wants to
A) lower interest rates and expand reserves.
B) raise interest rates and the money supply.
C) raise interest rates and reserves.
D) contract interest rates and reserves.
If expectations are formed rationally and wages are inflexible in the short run, the
short-run aggregate supply curve is
A) upward sloping.
B) horizontal.
C) vertical.
D) relatively flat.
The spread between the bid price and the offer price is a measure of
A) the underwriters’ spread.
B) brokers’ fees.
C) liquidity costs.
D) sunk costs.