A resilient market is one in which
A) wide price swings occur when orders decline.
B) volume picks up quickly when prices change.
C) bid-asked spreads are large.
D) volume is large.
In a __________ plan, employees may choose __________.
A) defined benefit; the assets they invest in
B) defined benefit; the benefits received during retirement
C) defined contribution; the assets they invest in
D) defined contribution; the benefits received during retirement
The Federal Reserve econometric model estimates that a 1 percent increase in
government spending, with the money supply held constant, will
A) increase real GDP by 1 percent per year for two years.
B) increase real GDP by 2 percent per year for two years.
C) decrease real GDP by 1 percent per year for two years.
D) have no effect on real GDP.
To stay with a fixed exchange rate system, a nation that is losing most of its
international reserves will have no choice but to
A) ask for or declare a devaluation.
B) ask for or declare a revaluation.
C) let its currency depreciate.
D) let its currency appreciate.
In the Classical view, inflation is the result of
A) excessive monetary growth.
B) speculation.
C) government spending.
D) natural disasters.
If the aggregate supply curve is horizontal, an increase in aggregate demand will
A) increase both real and nominal GDP by the full multiplier effect.
B) increase nominal GDP but not real GDP.
C) increase the price level but not real GDP.
D) increase real GDP by less than the full multiplier effect because of rising prices.
Assume a consumption function of the following form: C = 100 + .8Y. If income is
equal to $3,000, then consumption is
A) $2,400.
B) $2,500.
C) $2,900.
D) $3,100.
The impact of monetary policy on the cost of capital is emphasized by
A) supply-side economists.
B) Monetarists.
C) Keynesians.
D) rational expectations theorists.
If an investor pays $1,025 for a bond with a face value of $1,000, it follows that the
current yield is __________ than the coupon rate, and the investor will realize a capital
__________ if he holds the bond until maturity.
A) greater; gain
B) less; gain
C) greater; loss
D) less; loss
The NYSE is also called
A) the over-the-counter market.
B) the Big Board.
C) the Central Market.
D) the Exchange.
Futures contracts are marked-to-market
A) every day.
B) every week.
C) every month.
D) every quarter.
Which of the following statements is incorrect?
A) Government securities dealers often convert newly issued Treasury notes to
zero-coupon form.
B) Marketable U.S. government securities are widely held throughout the world.
C) 5-year Treasury securities are unavailable as TIPS.
D) The Federal Reserve owns some government securities as a result of open market
operations.
An increase in the demand for loanable funds causes
A) the price of securities to rise.
B) interest rates to rise.
C) the supply of securities to shift to the left.
D) the demand for securities to shift to the right.
Assume a required reserve ratio of .4. An increase in excess reserves of $60 can
potentially lead to a demand deposit expansion of
A) $50.
B) $100.
C) $125.
D) $150.
In the wake of the failure of __________ in 1984, the FDIC announced the “too big to
fail” policy.
A) Mariners’ Trust of Detroit
B) Manufacturers Hanover Bank
C) Silverado Savings-and-Loan
D) Continental Illinois Bank