An unexpected rise in Capacity Utilization should send bond prices __________ and
stock prices __________.
A) up; up
B) up; down
C) down; up
D) down; down
A decrease in money demand will shift the
A) IS curve to the left.
B) IS curve to the right.
C) LM curve to the left.
D) LM curve to the right.
It is estimated that approximately __________ percent of U.S. depositors have their
deposits fully federally insured.
A) 25
B) 40
C) 70
D) 99
The interest rate target emphasized in recent Federal Open Market Committee press
releases is the
A) discount rate.
B) prime rate.
C) federal funds rate.
D) equilibrium rate.
“A drop in the money supply lowered output in the short run, but left output unaffected
in the long run.” This statement implies that the price level __________ in the long run,
causing the interest rate to __________.
A) rose; rise
B) rose; fall
C) fell; rise
D) fell; fall
Complete crowding out implies that a government deficit financed by selling bonds to
the nonblank public will
A) have no effect on aggregate demand.
B) reduce aggregate demand.
C) increase aggregate demand.
D) reduce aggregate demand in the short run but cause demand to increase in the long
run.
If consumption equals $1,000 when income is $1,000 and increases to $1,900 when
income increases to $2,000, then the marginal propensity to consume is
A) 0.50.
B) 0.90.
C) 1.00.
D) 2.00.
When commercial banks make loans, they
A) increase bank capital.
B) increase bank reserves.
C) create checking account money.
D) create new currency.
Federal deposit insurance in the United States began in
A) 1864.
B) 1933.
C) 1968.
D) 1984.
Suppose a nation has a total population of 100,000,000. Out of that, 60% are in the
labor force and 55,000,000 people are employed. What is the nation’s unemployment
rate?
A) 5.0%
B) 8.3%
C) 9.1%
D) 10.9%
The main difference between a repo and federal funds transaction is that
A) the repo transaction uses the securities for collateral while the federal funds
transaction does not have collateral.
B) the federal funds transaction uses securities for collateral while the repo transaction
does not have collateral.
C) the repo transaction has an agreed upon interest rate while the federal funds
transaction has a spread between the sale and purchase price of securities.
D) the federal funds transaction is normally overnight while the typical repo agreement
is for 90 to 180 days.
If individuals save __________, there is usually __________ pressure on interest rates.
A) less; upward
B) more; upward
C) less; downward
D) None of the above.
A ‘secured” loan is one
A) with no stated collateral.
B) that is pending approval by a bank loan committee.
C) which has collateral.
D) in which the borrower is delinquent in loan payments but has not formally defaulted
on.
Which of the following is a possible cause of short-run inflation?
A) A decrease in the money supply
B) An increase in velocity
C) An increase in output
D) A decrease in velocity
Repealing Regulation Q still left savings-and-loan associations with a problem: most of
their __________ were still at __________ interest rates.
A) assets; low
B) assets; high
C) deposits; low
D) deposits; high