Small firms borrow from “monitoring-intensive” financial intermediaries in
__________ financial systems.
A) banking-oriented
B) markets-oriented
C) banking- and markets-oriented
D) socialist
Which of the following is likely to have the widest bid-asked spread?
A) A U.S Treasury bill
B) A U.S. Treasury note
C) A U.S. Treasury bond
D) A municipal bond
Bonds that pay no periodic (annual) interest are
A) zero-coupon bonds.
B) coupon securities.
C) perpetuities.
D) tax-exempts.
__________ bidders in a Treasury auction are guaranteed their bids at the __________
price resulting from the auction.
A) Competitive; market-clearing
B) Noncompetitive; highest
C) Competitive; lowest
D) Noncompetitive; market-clearing
The central bank in most countries is responsible for
A) monetary policy.
B) fiscal policy.
C) fiscal and monetary policy.
D) printing and currency only; most central banks have no policy role.
Excess reserves immediately decrease if
A) reserve requirements increase.
B) reserve requirements decrease.
C) the discount rate increases.
D) the discount rate decreases.
The largest group of saver-lenders in the financial system is
A) businesses.
B) government.
C) households.
D) financial intermediaries.
If prices rise in Japan, everything else constant, the dollar __________ against the yen
and the yen __________ against the dollar.
A) appreciates; appreciates
B) appreciates; depreciates
C) depreciates; appreciates
D) depreciates; depreciates
The Federal Reserve float is
A) items in process of collection – deferred credit items.
B) items in process of collection + deferred credit items.
C) deferred credit items – items in process of collection.
D) deferred credit items + items in process of collection.
In the Classical model, a decrease in the money supply __________ the real GDP and
__________ the price level.
A) leaves unchanged; leaves unchanged
B) leaves unchanged; lowers
C) lowers; lowers
D) lowers; leaves unchanged
If inflation in a country consistently averages 3 percent a year, prices will double in
A) 3 years.
B) 72 years.
C) 24 years.
D) 36 years.
If a bank has a lot of long-term loans, it will probably want to reduce interest rate risk
by encouraging __________-term deposits, especially of interest rates are expected to
__________ in the future.
A) long; rise
B) long; fall
C) short; rise
D) short; fall
Fluctuating interest rates tend to stabilize real output when the
A) IS curve is flat.
B) IS curve is steep.
C) LM curve is flat.
D) LM curve is steep.
Options on individual stocks are not listed on the
A) New York Stock Exchange.
B) American Stock Exchange.
C) Nasdaq.
D) Pacific Stock Exchange.
Mutual funds usually do not invest in
A) the stock market.
B) the municipal bond market.
C) the residential mortgage market.
D) Mutual funds invest in all of the above.
Since 1970 there has been a huge increase in the relative importance of __________ as
a source of bank funds.
A) negotiable CDs
B) time deposits
C) foreign deposits
D) transactions deposits
Most government securities transactions take place in the
A) futures market.
B) commodities market.
C) over-the-counter dealer market.
D) New York securities market.
__________ consumption will __________ as a result of a decrease in taxes.
A) Autonomous; decrease
B) Autonomous; increase
C) Induced; decrease
D) Induced; increase
“Even if there is a liquidity trap or interest-insensitive investment, a falling price level
will increase the real money supply and real wealth, and this impacts consumption.”
This is a statement a __________ economist might make as an explanation of why the
economy __________ pull itself out of a recession.
A) Classical; will
B) Classical; may not be able to
C) Keynesian; will
D) Keynesian; may not be able to
The formula for the effect of any change in autonomous spending, â–³A, where b equals
the MPC is
A) â–³Y = â–³A [1/(1 – b)].
B) â–³Y = â–³A [b/(1 – b)].
C) â–³Y = â–³A [1/(1 + b)].
D) â–³Y = â–³A [b/(1 + b)].
Federal Reserve liabilities are equal to
A) gold certificates + other Fed liabilities.
B) bank reserves – other Fed liabilities.
C) Federal Reserve notes.
D) Fed assets – Fed equity.
If investment is interest-insensitive,
A) monetary policy has no impact on equilibrium income.
B) monetary policy has no impact on the equilibrium interest rate.
C) fiscal policy has no impact on equilibrium income.
D) fiscal policy has no impact on the equilibrium interest rate.
A market in which orders exist in large volume is said to have
A) depth.
B) breadth.
C) resiliency.
D) efficiency.
In the United States, the reserve requirement on demand deposits is approximately
A) 10 percent.
B) 20 percent.
C) 50 percent.
D) 90 percent.
An unexpected drop in the LEI should send bond prices __________ and stock prices
__________.
A) up; up
B) up; down
C) down; up
D) down; down