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1) Macroeconomic equilibrium requires
A) equilibrium in the goods market
B) equilibrium in the money market
C) equilibrium in both the goods and money markets
D) equilibrium in neither the goods nor the money market
2) Which of the following instruments are traded in a capital market?
A) Corporate bonds
B) US Treasury bills
C) Negotiable bank CDs
D) Repurchase agreements
3) The demand for silver decreases, other things equal, when
A) the gold market is expected to boom
B) the market for silver becomes more liquid
C) wealth grows rapidly
D) interest rates are expected to rise
4) When stock prices become more volatile, the ________ curve for gold shifts right
and gold prices ________, everything else held constant
A) demand; increase
B) demand; decrease
C) supply; increase
D) supply; decrease
5) The time it takes to pass legislation to implement a particular policy is called
A) the data lag
B) the recognition lag
C) the legislative lag
D) the implementation lag
E) the effectiveness lag
6) The discount rate is kept ________ the federal funds rate because the Fed prefers that
A) below ; banks borrow reserves from each other
B) below; banks borrow reserves from the Fed
C) above; banks borrow reserves from each other
D) above; banks borrow reserves from the Fed
7) A change in perceived risk of a stock changes
A) the expected dividend growth rate
B) the expected sales price
C) the required rate of return
D) the current dividend
8) Which of the following statements are true?
A) Checkable deposits are payable on demand
B) Checkable deposits do not include NOW accounts
C) Checkable deposits are the primary source of bank funds
D) Demand deposits are checkable deposits that pay interest
9) If an individual moves money from a money market deposit account to currency,
A) M1 increases and M2 stays the same
B) M1 stays the same and M2 increases
C) M1 stays the same and M2 stays the same
D) M1 increases and M2 decreases
10) Bonds that are sold in a foreign country and are denominated in a currency other
than that of the country in which it is sold are known as
A) foreign bonds
B) Eurobonds
C) equity bonds
D) country bonds
11) A restriction on bank activities that was repealed in 1999 was
A) the prohibition of the payment of interest on checking deposits
B) restrictions on credit terms
C) minimum down payments on loans to purchase securities
D) separation of commercial banking from the securities industries
12) The total amount of required reserves in the banking system is equal to the
________ the required reserve ratio and checkable deposits
A) sum of
B) difference between
C) product of
D) ratio between
13) Which of the following statements accurately describes the two measures of the
money supply?
A) The two measures do not move together, so they cannot be used interchangeably by
policymakers
B) The two measures' movements closely parallel each other, even on a
month-to-month basis
C) Short-run movements in the money supply are extremely reliable
D) M2 is the narrowest measure the Fed reports
14) Because ________ are less liquid for the depositor than ________, they earn higher
interest rates
A) passbook savings; time deposits
B) money market deposit accounts; time deposits
C) money market deposit accounts; passbook savings
D) time deposits; passbook savings
15) When banks borrow money from the Federal Reserve, these funds are called
A) federal funds
B) discount loans
C) federal loans
D) Treasury funds
16) A simple deposit multiplier equal to two implies a required reserve ratio equal to
A) 100 percent
B) 50 percent
C) 25 percent
D) 0 percent
17) The Japanese banking system went through a cycle of ________ in the 1990s
similar to the one that occurred in the US in the 1980s
A) regulatory forbearance
B) policy antagonism
C) regulatory ignorance
D) policy renewal
