Prior to almost all recessions since 1950, there has been a drop in
A) inflation.
B) the money stock.
C) the growth rate of the money stock.
D) interest rates.
Using a unified analytic framework to present the information in the text keeps the
knowledge
A) focused on theories that have little to do with actual behavior.
B) theoretical and uninteresting.
C) abstract and not applicable to real life.
D) from becoming obsolete.
Monetary policy authorities can affect real interest rates
A) in the short run, but not in the long run.
B) in the long run, but not in the short run.
C) permanently.
D) both in the long run and the short run.
In pursuing a strategy of monetary targeting, the central bank announces that it will
achieve a certain value (the target) of the annual growth rate of a ________.
A) a monetary aggregate
B) a reserve aggregate
C) the monetary base
D) GDP
In actual practice, short-term interest rates and long-term interest rates usually move
together; this is the major shortcoming of the
A) segmented markets theory.
B) expectations theory.
C) liquidity premium theory.
D) separable markets theory.
If the probability of a bond default increases because corporations begin to suffer large
losses, then the default risk on corporate bonds will ________ and the expected return
on these bonds will ________, everything else held constant.
A) decrease; increase
B) decrease; decrease
C) increase; increase
D) increase; decrease
In the open-economy ISLM model, net export is specified as a function of and
exchange arte is specified as a function of .
A) output; output.
B) money supply; interest rate.
C) exchange rate; interest rate.
D) exchange rate; money demand.
Predicting the impact of institutional change on the effectiveness of monetary policy is
best done with a
A) structural model.
B) reduced-form model.
C) black-box model.
D) scientific model.
Which of the following was the fastest-growing financial intermediary of the 1970s?
A) commercial banks
B) credit unions
C) finance companies
D) money market mutual funds
When yield curves are downward sloping
A) long-term interest rates are above short-term interest rates.
B) short-term interest rates are above long-term interest rates.
C) short-term interest rates are about the same as long-term interest rates.
D) medium-term interest rates are above both short-term and long-term interest rates.
If the incentive to take advantage of a conflict of interest is high
A) removing the economies of scope that created the conflict may induce higher costs
because of the decrease in the flow of reliable information.
B) then the government must step in to remove the conflict.
C) the costs of non-action in removing the conflict will always be higher than the cost
of removing the conflict.
D) firms will always step in and work to remove the conflict.
A ________ yield curve predicts a future increase in inflation.
A) steeply upward sloping
B) slight upward sloping
C) flat
D) downward sloping
A put option gives the owner the
A) right to sell the underlying security.
B) obligation to sell the underlying security.
C) right to buy the underlying security.
D) obligation to buy the underlying security.
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.
If future changes in stock prices are unpredictable, then we say that the stock prices
follow a
A) random walk.
B) straight and narrow path.
C) meandering path.
D) generalized walk.
The government corporation that insures pension benefits is
A) Fannie Mae.
B) Ginnie Mae.
C) Penny Benny.
D) Sallie Mae.
A permanent negative supply shock leads to ________ real interest rates ________.
A) higher; in both the short and long runs
B) higher; in the short run but not in the long run
C) lower; in both the short and long runs
D) lower; in the short run but not in the long run
Which policy measure requires investment banks to sever the links between research
and securities underwriting?
A) Sarbanes-Oxley Act of 2002
B) Global Legal Settlement of 2002
C) Gramm-Leach-Bliley Act of 1999
D) Riegle-Neal Act of 1994
Which of the followings is NOT true about the word “autonomous” that economists
use?
A) Changes in autonomous components are associated with shifts of a curve.
B) The autonomous component of a variable is exogenous.
C) The autonomous component of a variable is independent of other variables in the
model.
D) The autonomous component of a variable is induced by other variables in the model.
When output is below potential and the policy rate has hit the floor of zero, the resulting
fall in inflation leads to ________ real interest rates, which ________ output further,
which causes inflation to fall further.
A) lower; increase
B) higher; depress
C) higher; increase
D) lower; depress