1) What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells
for $900 next year?
A) 5 percent
B) 10 percent
C) -5 percent
D) -10 percent
2) Under a fixed exchange rate regime, if a country has an ________ exchange rate,
then its central bank’s attempt to keep its currency from depreciating will result in a
________ of international reserves
A) undervalued; gain
B) undervalued; loss
C) overvalued; gain
D) overvalued; loss
3) The US banking system is considered to be a dual system because
A) banks offer both checking and savings accounts
B) it actually includes both banks and thrift institutions
C) it is regulated by both state and federal governments
D) it was established before the Civil War, requiring separate regulatory bodies for the
North and South
4) Which of the following is not a nontransaction deposit?
A) Savings accounts
B) Small-denomination time deposits
C) Negotiable order of withdrawal accounts
D) Certificate of deposit
5) To be considered well capitalized, a bank’s leverage ratio must exceed
A) 10%
B) 8%
C) 5%
D) 3%
6) An increase in autonomous consumer expenditure causes the equilibrium level of
aggregate output to ________ at any given interest rate and shifts the ________ curve
to the ________, everything else held constant
A) rise; LM; right
B) rise; IS; right
C) fall; LM; left
D) fall; IS; left
7) A feature of debt markets in emerging-market countries is that debt contracts are
typically
A) very short term
B) long term
C) intermediate term
D) perpetual
8) The aggregate demand curve is downward sloping because a higher inflation rate
leads the central bank to ________ real interest rates, thereby ________ the level of
equilibrium aggregate output, everything else held constant
A) raise; lowering
B) raise; raising
C) reduce; lowering
D) reduce; raising
9) In the early 1930s, the currency ratio rose, as did the level of excess reserves Money
supply analysis predicts that, everything else held constant, the money supply should
have
A) risen
B) fallen
C) remain unchanged
D) either risen, fallen, or remain unchanged
10) In the early 1990s, M2 growth underwent a dramatic ________, which some
researchers believe ________ be explained by traditional money demand functions
A) surge; cannot
B) surge; can
C) slowdown; cannot
D) slowdown; can
11) The US government can play an important role in establishing the credibility of
anti-inflation policy by
A) demonstrating fiscal responsibility
B) monitoring the Fed
C) conducting fiscal policy
D) all of the above