1) One of the concerns of increased bank consolidation is the reduction in community
banks which could result in
A) less lending to small businesses
B) loss of cultural identity
C) higher interest rates
D) more bank regulation
2) Because shifts in aggregate demand are not viewed as being particularly important to
aggregate output fluctuations, they do not see much need for activist policy to eliminate
high unemployment “They” refers to proponents of
A) the natural rate hypothesis
B) monetarism
C) the Phillips curve model
D) real business cycle theory
3) In the United States, the government agency requiring that firms that sell securities in
public markets adhere to standard accounting principles and disclose information about
their sales, assets, and earnings is the
A) Federal Communications Commission
B) Federal Trade Commission
C) Securities and Exchange Commission
D) Federal Reserve System
4) Everything else held constant, if aggregate output is to the right of the LM curve,
then there is an excess ________ of money which will cause the interest rate to
________
A) supply; fall
B) supply; rise
C) demand; fall
D) demand; rise
5) If a member of the nonbank public purchases a government bond from the Federal
Reserve in exchange for currency, the monetary base will ________, but reserves will
________
A) remain unchanged; rise
B) remain unchanged; fall
C) rise; remain unchanged
D) fall; remain unchanged
6) The Federal Reserve will engage in a matched sale-purchase transaction when it
wants to ________ reserves ________ in the banking system
A) increase; permanently
B) increase; temporarily
C) decrease; temporarily
D) decrease; permanently
7) The ________ is defined as the payments to the owner plus the change in a security’s
value expressed as a fraction of the security’s purchase price
A) yield to maturity
B) current yield
C) rate of return
D) yield rate
8) Lack of competition in the United States banking industry can be attributed to
A) the fact that competition does not benefit consumers
B) the fact that branching has eliminated competition
C) recent legislation restricting competition
D) nineteenth-century populist sentiment
9) Under the current managed float exchange rate regime; countries with surpluses in
their balance of payments frequently do not want to see their currencies appreciate
because it makes their goods ________ expensive abroad and foreign goods ________
in their countries
A) more; cheaper
B) more; costlier
C) less; cheaper
D) less; costlier
10) A central bank ________ of domestic currency and corresponding ________ of
foreign assets in the foreign exchange market leads to an equal decline in its
international reserves and the monetary base, everything else held constant
A) sale; purchase
B) sale; sale
C) purchase; sale
D) purchase; purchase
11) A rise in autonomous planned investment spending causes the equilibrium level of
aggregate output to ________ and shifts the ________ curve to the ________,
everything else held constant
A) rise; LM; right
B) rise; IS; right
C) fall; IS; left
D) fall; LM; left
12) The efficient markets hypothesis indicates that investors
A) can use the advice of technical analysts to outperform the market
B) do better on average if they adopt a “buy and hold” strategy
C) let too many unexploited profit opportunities go by if they adopt a “buy and hold”
strategy
D) do better if they purchase loaded mutual funds