1) The difference between merchandise exports and imports is called the ________
balance
A) current account
B) capital account
C) official reserve transactions
D) trade
2) The reduction in transactions costs per dollar of investment as the size of transactions
increases is
A) discounting
B) economies of scale
C) economies of trade
D) diversification
3) Equilibrium output is reduced by an increase in
A) planned investment
B) taxes
C) government spending
D) net exports
4) In the long-run ISLM model and with everything else held constant, the long-run
effect of an autonomous fall in consumption expenditure is to ________ real output and
________ the interest rate
A) increase; increase
B) increase; not change
C) not change; increase
D) not change; decrease
5) Which of the followings is not a current duty of the Board of Governors of the
Federal Reserve System?
A) Setting margin requirements, the fraction of the purchase price of the securities that
has to be paid for with cash
B) Setting the maximum interest rates payable on certain types of time deposits under
Regulation Q
C) Approving the discount rate “established” by the Federal Reserve banks
D) Representing the United States in negotiations with foreign governments on
economic matters
6) The theory of portfolio choice suggests that the most important factor affecting the
demand for domestic and foreign assets is the ________ on these assets relative to one
another
A) interest rate
B) risk
C) expected return
D) liquidity
7) A nominal variable, such as the inflation rate or the money supply, which ties down
the price level to achieve price stability is called ________ anchor
A) a nominal
B) a real
C) an operating
D) an intermediate
8) ________ quantity theory of money suggests that the demand for money is purely a
function of income, and interest rates have no effect on the demand for money
A) Keynes’s
B) Fisher’s
C) Friedman’s
D) Tobin’s
9) Everything else held constant, when output is ________ the natural rate level, wages
will begin to ________, decreasing short-run aggregate supply
A) above; fall
B) above; rise
C) below; fall
D) below; rise
10) A case for capital inflow controls can be made because capital inflows
A) can cause a lending boom and lead to excessive risk taking
B) never finance productive investments
C) always finance productive investments
D) are less likely to cause financial crises than regulation of banking activities
11) A balance of payments ________ is associated with a loss of international reserves,
while a balance of payments ________ is associated with a gain
A) surplus; surplus
B) surplus; deficit
C) deficit; surplus
D) deficit; deficit
12) When bad storms slow the check-clearing process, float tends to ________ causing
the Fed to initiate defensive open market ________
A) decrease; sales
B) decrease; purchases
C) increase; sales
D) increase; purchases
13) Which of the following accurately summarize the empirical evidence about
technical analysis?
A) Technical analysts fare no better than other financial analysison average they do not
outperform the market
B) Technical analysts tend to outperform other financial analysis, but on average they
nevertheless under-perform the market
C) Technical analysts fare no better than other financial analysis, and like other
financial analysts they outperform the market
D) Technical analysts fare no better than other financial analysis, and like other
financial analysts they under-perform the market
14) If the United States has a current account deficit with England of $1 million, and
the Bank of England sells $1 million worth of pounds in the foreign exchange market,
then England ________ $1 million of international reserves and its monetary base
________ by $1 million
A) gains; rises
B) gains; falls
C) loses; rises
D) loses; falls