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1) Everything else held constant, if aggregate output is to the right of the IS curve, then
there is an excess ________ of goods which will cause aggregate output to ________
A) supply; fall
B) supply; rise
C) demand; fall
D) demand; rise
2) In the 1950s the interest rate on three-month Treasury bills fluctuated between 1
percent and 35 percent; in the 1980s it fluctuated between ________ percent and
________ percent
A) 5; 15
B) 4; 115
C) 4; 18
D) 5; 10
3) American businesses get their external funds primarily from
A) bank loans
B) bonds and commercial paper issues
C) stock issues
D) loans from nonbank financial intermediaries
4) The interest rate on Baa (medium quality) corporate bonds is ________, on average,
than other interest rates, and the spread between it and other rates became ________ in
the 1970s
A) lower; smaller
B) lower; larger
C) higher; smaller
D) higher; larger
5) Contractual savings institutions include
A) mutual savings banks
B) money market mutual funds
C) commercial banks
D) life insurance companies
6) When the Fed ________ the money stock, the money supply curve shifts to the
________ and the interest rate ________, everything else held constant
A) decreases; right; rises
B) increases; right; falls
C) decreases; left; falls
D) increases; left; rises
7) If the money supply is $500 and nominal income is $3,000, the velocity of money is
A) 1/60
B) 1/6
C) 6
D) 60
8) Everything else held constant, in the market for reserves, when the federal funds rate
is 3%, lowering the interest rate paid on excess reserves rate from 2% to 1%
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
9) When an investment bank ________ securities, it guarantees a price for a
corporation's securities and then sells them to the public
A) underwrites
B) undertakes
C) overwrites
D) overtakes
10) Suppose your payroll check is directly deposited to your checking account
Everything else held constant, total reserves in the banking system ________ and the
monetary base ________
A) remain unchanged; remains unchanged
B) remain unchanged; increases
C) decrease; increases
D) decrease; decreases
