The wealth of most people declined as a result of the financial crisis of 2007-2009. As a
result, which asset was most likely became a larger portion of their portfolio?
A) bonds
B) stocks
C) house
D) checking account
Answer:
The main difference between a sterilized intervention and unsterilized intervention in
the foreign exchange market is:
A) a sterilized intervention is coordinated with other nations
B) an unsterilized intervention does not change the exchange rate
C) an unsterilized intervention does not change the monetary base
D) a sterilized intervention does not change the monetary base
Answer:
The capacity of a firm can best be described as:
A) when a firm are producing maximum output
B) a firm’s production when operating normal hours using a normal sized workforce
C) when a firm makes full use of all the space available in his factory or building
D) when all of the firm’s workers are producing at their maximum potential
Answer:
In the new Keynesian view, the larger the proportion of firms in the economy with
sticky prices,
A) the steeper the SRAS curve will be.
B) the flatter the SRAS curve will be.
C) the greater the increase in the price level for a given shift in the AD curve.
D) the less effective is fiscal policy in increasing output.
Answer:
If the U.S. dollar were to cease to be the leading international reserve currency,
A) U.S. households and businesses would be unaffected.
B) U.S. households and businesses would be subject to increased exchange rate risk.
C) interest rates in the U.S. would be lower.
D) the U.S. monetary base would contract.
Answer:
Everything else being constant, a lower real interest rate
A) increases desired saving and net exports.
B) decreases desired saving but increases net exports.
C) increases desired saving and investment.
D) increases desired investment but decreases net exports.
Answer:
Primary credit is only a backup source of funds for health banks since
A) the primary credit rate is set above the federal funds rate.
B) restrictions as to its use limit its benefits.
C) the secondary credit rate pays 0.5% more.
D) banks must seek funds from other sources prior to requesting a discount loan.
Answer:
Futures trading practices in the United States are regulated by
A) the Chicago Board of Trade.
B) the Chicago Mercantile Exchange.
C) the Commodities Futures Trading Commission.
D) the Board of Futures Trading.
Answer:
The Employment Act of 1946 codified the federal government’s commitment to
A) promote high employment consistent with price stability.
B) promote high employment irrespective of the effects on price stability.
C) guarantee a job to every unemployed person.
D) fine companies that engage in excessive layoffs during recessions.
Answer:
Reserve deposits are
A) assets for financial institutions, but liabilities for the Fed.
B) liabilities for financial institutions, but assets for the Fed.
C) assets for both financial institutions and the Fed.
D) liabilities for both financial institutions and the Fed.
Answer:
As of 2011, which of the following was the largest stock exchange in terms of total
value traded?
A) the New York Stock Exchange
B) London Stock Exchange
C) Shanghai Stock Exchange
D) Tokyo Stock Exchange
Answer:
Which of the following agencies has established standardized accounting principles for
reporting corporate earnings?
A) The Securities and Exchange Commission
B) The Federal Trade Commission
C) The National Accounting Board
D) The Fair Reporting Commission
Answer:
Which of the following statements about the natural rate of unemployment is correct?
A) Currently, most economists think that the natural rate is between 5% and 6%.
B) Currently, most economists believe the natural rate is zero.
C) When unemployment is at its natural rate, then only frictional unemployment
remains.
D) When unemployment is at its natural rate, then only structural unemployment
remains.
Answer:
Other assets are inferior to money in the sense that
A) they increase in value more slowly than does money.
B) they have a lower overall return than money.
C) they are more vulnerable to losing their real value as inflation increases.
D) they generate transactions costs when they are exchanged for money.
Answer:
A cash item in the process of collection is
A) a U.S. Treasury bill that has matured, but for which the bank has not yet received
payment.
B) a car loan payment that is due but not yet received by the bank.
C) a check drawn against another bank, from whom the funds have not yet been
collected.
D) currency that has been deposited in the bank, but not yet formally counted and
entered into the bank’s balance sheet.
Answer:
The recession that became the Great Depression began
A) two months prior to the stock market crash of 1929.
B) with the stock market crash of 1929.
C) one year after the stock market crash of 1929.
D) with the banking panics of the early 1930s.
Answer:
All of the following have been proposed as explaining the limited effectiveness of
monetary policy during and after the Financial Crisis of 2007-2009 EXCEPT:
A) recessions accompanied by financial crises tend to be severe
B) a high level of uncertainty due in part to government policy
C) the reluctance of the Fed to implement nonconventional policies
D) structural changes as important sectors of the economy were deeply affected by the
financial crisis
Answer:
A $10 million open market sale will decrease the monetary base by
A) $10 million.
B) $10 million times the money multiplier.
C) $10 million divided by the money multiplier.
D) an amount between $0 and $10 million, depending on the fraction of the purchase
the public wishes to hold as currency.
Answer:
What is the yield on a discount basis for a U.S. Treasury bill that has a face value of
$10,000, has a price of $9500, and will mature in 180 days?
A) 5.00%
B) 5.25%
C) 10.00%
D) 10.67%
Answer:
In a large open economy,
A) domestic lending and borrowing decisions have no impact on the world real interest
rate.
B) an increase in the domestic supply of loanable funds would lower the world real
interest rate.
C) the domestic equilibrium real interest rate is determined independently of foreign
borrowing and lending.
D) an increase in the domestic demand for loanable funds would lower the world real
interest rate.
Answer:
According to the new classical approach to the aggregate supply curve, the aggregate
supply curve slopes upward because
A) increases in the price level result in lower real balances.
B) higher current output results in higher desired investment.
C) higher prices result in higher levels of spending as consumers attempt to stay ahead
of inflation.
D) businesses have difficulty in distinguishing relative price increases from general
price increases.
Answer:
The movement to set up a central bank in the United States was spurred by the financial
panic that occurred in
A) 1816
B) 1907
C) 1929
D) 1987
Answer:
If the real interest rate is 2% and expected inflation is 2%, the nominal interest rate is:
A) 0%
B) 1%
C) 2%
D) 4%
Answer:
How can a bond investor hedge against a possible bear market in bonds?
A) sell futures contracts on Treasury notes
B) buy futures contracts on Treasury notes
C) going long in the spot market
D) going short in the spot market
Answer:
The Bank of the United States faced opposition from which of the following?
A) local banks who resented the Bank’s supervision
B) advocates of limited government who distrusted its power
C) farmers and small businesses who resented the Bank’s interference with their ability
to obtain loans
D) all of the above
Answer:
How does hedging affect the flow of funds in the financial system?
A) It reduces it since it is a sign that investors do not like risk.
B) It reduces it because it increases risk by encouraging speculation.
C) It increases it because it reduces risk thus encouraging more people to make
financial investments.
D) It increases it by encouraging more speculation.
Answer:
How is a monopolistically competitive firm likely to respond to fluctuations in demand
in the short run?
A) by selling more or less at the posted price
B) by changing prices
C) by reducing menu costs
D) by increasing menu costs
Answer:
The inflation gap can best be described as:
A) the percentage difference between GDP and its potential
B) the difference between inflation and its target
C) the change in the inflation rate from one year to the next
D) the difference between the inflation rate and the average inflation rate of that of the
nations with the 3 lowest inflation rates
Answer:
How can a country with a fixed nominal exchange rate, such as Greece, experience a
lower real exchange rate?
A) by experiencing higher inflation than its partners
B) by experiencing deflation if its partners have low inflation rates
C) by limiting the growth of productivity
D) by increasing wages at a faster rate than inflation
Answer:
Which of the following is the correct expression for short-run aggregate supply in the
new classical view?
A) YP = Y + a(P – )
B) Y = YP+ a(P – )
C) YP = Y + a(P + )
D) Y = YP + a(P + )
Answer: