Which of the following is not a permanent member of the FOMC?
A) The president of the New York Fed
B) The president of the Philadelphia Fed
C) The chairman of the board of governors
D) All of the above are permanent members of the FOMC.
Recent U.S. budget deficits have arguably been financed by foreigners; if it were not for
foreign __________ of Treasury securities, U.S. interest rate would be much
__________.
A) sales; higher
B) sales; lower
C) purchases; higher
D) purchases; lower
When the aggregate demand curve shifts to the left against a vertical aggregate supply
curve, the price level should __________ unless, as __________ argue, prices may
have rigidities.
A) fall; Keynesians
B) fall; Monetarists
C) rise; Keynesians
D) rise; Monetarists
Assume that the Cambridge k = .20. If income is equal to $100,000, the transactions
demand for money is equal to
A) $20,000.
B) $50,000.
C) $100,000.
D) $500,000.
If a country is experiencing hyperinflation, it is safe to assume that
A) the velocity of money has decreased.
B) the country has returned to a barter economy.
C) the country’s money supply has risen rapidly.
D) real GDP in the country has fallen.
Theory suggests that stock prices should be positively related to
A) government borrowing.
B) the unemployment rate.
C) the interest rate.
D) the money supply.
The assets of a bank are its __________ of funds
A) uses
B) sources
C) reserves
D) excess
Which of the following are not thrift institutions?
A) Savings and loan associations (S&Ls)
B) Mutual savings banks
C) Money market mutual funds
D) Credit unions
The risk premium that risk averse investors will demand on a security will be in
proportion to the __________ of the portfolio.
A) systematic risk
B) nonsystematic risk
C) risk of the worst case return
D) diversification
A drop in Durable Goods Orders should send bond prices __________ and stock prices
__________.
A) up; up
B) up; down
C) down; up
D) down; down
A type of life insurance with separate pure-insurance and savings components is
A) whole life insurance.
B) universal life insurance.
C) term life insurance.
D) group life insurance.
The formula for relating the percentage change in price to the bond’s duration is
A) â–³P/P = [-â–³i/(1 + i) × D].
B) â–³P/P = [â–³i/(1 + i) × D].
C) △P/P = [-△i * (1 + i) ÷ D].
D) △P/P = [-△i/(1 + i) ÷ D].
Which order does the Federal Reserve’s plan for implementing monetary policy follow?
A) Tools => Intermediate Targets => Operating Targets => Goals
B) Goals => Tools => Intermediate Targets => Operating Targets
C) Tools => Operating Targets => Intermediate Targets => Goals
D) Tools => Goals => Operating Targets => Intermediate Targets
An insurance company holding a single-home mortgage should be most concerned
about the mortgage’s __________ risk.
A) default
B) prepayment
C) price fluctuation
D) collateral
One type of financial intermediary now falling in relative importance is
A) money market mutual funds.
B) pension funds.
C) thrift institutions.
D) mutual funds.
The London gold fixing is an example of a(n)
A) dealer market.
B) Walrasian auction market.
C) brokered market.
D) secondary market.
Which of the following appears as an asset on the Federal Reserve’s balance sheet?
A) Capital accounts
B) U.S. Treasury deposits
C) U.S. government securities held under repurchase agreements
D) Federal Reserve notes outstanding
An unexpected fall in GDP growth should send bond prices __________ and stock
prices __________.
A) up; up
B) up; down
C) down; up
D) down; down