1) During the 1950s, Fed monetary policy targeted
A) the monetary base
B) the exchange rate
C) discount loans
D) interest rates
2) In the early stages of the 1980s banking crisis, financial institutions were especially
harmed by
A) declining interest rates from late 1979 until 1981
B) the severe recession in 1981-82
C) the disinflation from mid 1980 to early 1983
D) the increase in energy prices in the early 80s
3) Financial crises in advanced economies might start from a
A) debt deflation
B) currency crisis
C) mismanagement of financial innovations
D) currency mismatch
4) The monetary policy strategy that directly ties down the price of internationally
traded goods is
A) exchange-rate targeting
B) monetary targeting
C) inflation targeting
D) the implicit nominal anchor
5) When the economy suffers a permanent negative supply shock and the central bank
responds by changing the autonomous component of monetary policy to keep inflation
at the target inflation rate, then
A) aggregate demand curve shifts leftward
B) output will be unchanged
C) output will be at its potential
D) all of the above
E) both A and C
6) Everything else held constant, in the market for reserves, when the federal funds rate
is 3%, raising the discount rate from 5% to 6%
A) lowers the federal funds rate
B) raises the federal funds rate
C) has no effect on the federal funds rate
D) has an indeterminate effect on the federal funds rate
7) Regulations designed to provide information to the marketplace so that investors can
make informed decisions are called
A) disclosure requirements
B) efficient market requirements
C) asset restrictions
D) capital requirements
8) The Basel Accord, an international agreement, requires banks to hold capital based
on
A) risk-weighted assets
B) the total value of assets
C) liabilities
D) deposits
9) Before 1863,
A) federally-chartered banks had regulatory advantages not granted to state-chartered
banks
B) the number of federally-chartered banks grew at a much faster rate than at any other
time since the end of the Civil War
C) banks acquired funds by issuing bank notes
D) banks were required to maintain 100% of their deposits as reserves
10) The marginal propensity to consume (mpc) can be defined as the fraction of
A) a change in income that is spent
B) a change in income that is saved
C) income that is spent
D) income that is saved
11) An increase in the money ________ shifts the LM curve to the ________, causing
the interest rate to fall and output to rise, everything else held constant
A) demand; right
B) demand; left
C) supply; right
D) supply; left
12) Hong Kong chooses to have ________ and ________ and therefore, cannot have an
independent monetary policy at the same time
A) capital control, a fixed exchange rate
B) free capital mobility, a fixed exchange rate
C) free capital mobility, a flexible exchange rate
D) capital control, a flexible exchange rate
13) If net exports increase by 100 and the mpc is 075, equilibrium aggregate output
increases by
A) 100
B) 250
C) 400
D) 750
14) Evidence in support of the efficient markets hypothesis includes
A) the failure of technical analysis to outperform the market
B) the small-firm effect
C) the January effect
D) excessive volatility