Which of the following are transaction deposits?
A) savings accounts
B) small-denomination time deposits
C) checkable deposits
D) certificates of deposit
If reserves in the banking system increase by $100, then checkable deposits will
increase by $1000 in the simple model of deposit creation when the required reserve
ratio is
A) 0.01.
B) 0.10.
C) 0.05.
D) 0.20.
GDP measured with constant prices is referred to as
A) real GDP.
B) nominal GDP.
C) the GDP deflator.
D) industrial production.
A $1000 face value coupon bond with a $60 coupon payment every year has a coupon
rate of
A) .6 percent.
B) 5 percent.
C) 6 percent.
D) 10 percent.
The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in
2000.
A) housing
B) manufacturing
C) high-tech
D) banking
The most comprehensive measure of aggregate output is
A) gross domestic product.
B) net national product.
C) the stock value of the industrial 500.
D) national income.
Aggregate output is increased by a decrease in
A) autonomous consumption.
B) government spending.
C) planned investment.
D) net taxes.
If a banker expects interest rates to fall in the future, her best strategy for the present is
A) to increase the duration of the bank’s liabilities.
B) to buy short-term bonds.
C) to sell long-term certificates of deposit.
D) to increase the duration of the bank’s assets.
If a bank needs to acquire funds quickly to meet an unexpected deposit outflow, the
bank could
A) borrow from another bank in the federal funds market.
B) buy U.S. Treasury bills.
C) increase loans.
D) buy corporate bonds.
Everything else held constant, a decrease in the cost of production ________ aggregate
________.
A) increases; demand
B) decreases; demand
C) increases; supply
D) decreases; supply
Evidence from the United States during the period 1973-2002 indicates that the value of
the dollar and the measure of the ________ interest rate rose and fell together.
A) real
B) nominal
C) expected
D) actual
Because policies in the United States were too expansionary from 1965 through 1973,
the U.S. suffered
A) demand-pull inflation.
B) cost-push inflation, as workers sought higher wages in order to keep up with
inflation.
C) both demand-pull and cost-push inflation.
D) neither demand-pull nor cost-push inflation.
In the long-run ISLM model and with everything else held constant, the long-run effect
of a cut in government spending is to ________ real output and ________ the interest
rate.
A) increase; increase
B) increase; not change
C) not change; increase
D) not change; decrease
The nine directors of the Federal Reserve Banks are split into three categories:
________ are professional bankers, ________ are leaders from industry, and ________
are to represent the public interest and are not allowed to be officers, employees, or
stockholders of banks.
A) 5; 2; 2
B) 2; 5; 2
C) 4; 2; 3
D) 3; 3; 3
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.
Total Reserves minus vault cash equals
A) bank deposits with the Fed.
B) excess reserves.
C) required reserves.
D) currency in circulation.
Everything else held constant, if the sum of the required reserve ratio and the excess
reserve ratio is less than one, a decrease in the currency-checkable deposit ratio will
mean
A) an increase in currency in circulation and an increase in the money supply.
B) an increase in money supply.
C) a decrease in the money supply.
D) an increase in currency in circulation but no change in the money supply.
A Fed purchase of gold, SDRs, a deposit denominated in a foreign currency or any
other asset is just an open market ________ of these assets, ________ the monetary
base.
A) purchase; raising
B) sale; raising
C) purchase; lowering
D) sale; lowering
In the Keynesian framework, as long as output is above the equilibrium level,
unplanned inventory investment will remain ________ and firms will continue to
________ production.
A) negative; lower
B) negative; raise
C) positive; lower
D) positive; raise
If the price of bonds is set ________ the equilibrium price, the quantity of bonds
demanded exceeds the quantity of bonds supplied, a condition called excess ________.
A) above; demand
B) above; supply
C) below; demand
D) below; supply
Federal funds are
A) funds raised by the federal government in the bond market.
B) loans made by the Federal Reserve System to banks.
C) loans made by banks to the Federal Reserve System.
D) loans made by banks to each other.
The business term for economies of scope is
A) economies of scale.
B) diversification.
C) cooperation.
D) synergies.
Because shifts in aggregate demand are not viewed as being particularly important to
aggregate output fluctuations, they do not see much need for activist policy to eliminate
high unemployment. “They” refers to proponents of
A) the natural rate hypothesis.
B) monetarism.
C) the Phillips curve model.
D) real business cycle theory.
When the value of the British pound changes from $1.50 to $1.25, then the pound has
________ and the U.S. dollar has ________.
A) appreciated; appreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) depreciated; depreciated
The First Bank of the United States
A) was disbanded in 1811 when its charter was not renewed.
B) had its charter renewal vetoed in 1832.
C) was fundamental in helping the Federal Government finance the War of 1812.
D) None of the above.
If an economy experiences high interest rates and high unemployment, the ISLM
framework predicts that ________ policy has been too ________.
A) fiscal; expansionary
B) fiscal; contractionary
C) monetary; expansionary
D) monetary; contractionary
Under the Global Legal Settlement of 2002, the provision that requires, for a period of
five years, brokerage firms to contract with independent research firms to provide
information to their customers is an example of
A) regulate for transparency.
B) supervisory oversight.
C) separation of functions.
D) socialization of information production.
Although reserve requirements and the discount rate are not actually set by the
________, decisions concerning these policy tools are effectively made there.
A) Federal Reserve Bank of New York
B) Board of Governors
C) Federal Open Market Committee
D) Federal Reserve Banks
A model that is composed of many equations that show the channels through which
monetary and fiscal policy affect aggregate output and spending is called a
A) reduced-form model.
B) median-voter model.
C) informed median-voter model.
D) structural model.
In the figure above, a factor that could cause the supply of bonds to shift to the right is
A) a decrease in government budget deficits.
B) a decrease in expected inflation.
C) a recession.
D) a business cycle expansion.
An increase in the expected future domestic exchange rate causes the demand for
domestic assets to shift to the ________ and the domestic currency to ________,
everything else held constant.
A) right; appreciate
B) right; depreciate
C) left; appreciate
D) left; depreciate