1) Long-term debt has a maturity that is
A) between one and ten years
B) less than a year
C) between five and ten years
D) ten years or longer
2) In general, banks would prefer to acquire funds quickly by ________ rather than
________
A) reducing loans; selling securities
B) reducing loans; borrowing from the Fed
C) borrowing from the Fed; reducing loans
D) “calling in” loans; selling securities
3) When good weather speeds the check-clearing process, float tends to ________
causing the Fed to initiate ________ open market ________
A) decrease; defensive; sales
B) decrease; dynamic; sales
C) decrease; defensive; purchases
D) increase; dynamic; purchases
4) Open market sales ________ reserves and the monetary base thereby ________ the
money supply
A) raise; lowering
B) raise; raising
C) lower; lowering
D) lower; raising
5) If a bank has $100,000 of checkable deposits, a required reserve ratio of 20 percent,
and it holds $40,000 in reserves, then the maximum deposit outflow it can sustain
without altering its balance sheet is
A) $30,000
B) $25,000
C) $20,000
D) $10,000
6) According to the law of one price, if the price of Colombian coffee is 100 Colombian
pesos per pound and the price of Brazilian coffee is 4 Brazilian reals per pound, then
the exchange rate between the Colombian peso and the Brazilian real is:
A) 40 pesos per real
B) 100 pesos per real
C) 25 pesos per real
D) 04 pesos per real
7) Commercial and farm mortgages, in which property is pledged as collateral, account
for
A) one-quarter of borrowing by nonfinancial businesses
B) one-half of borrowing by nonfinancial businesses
C) one-twentieth of borrowing by nonfinancial businesses
D) two-thirds of borrowing by nonfinancial businesses
8) Which of the following is NOT an entity of the Federal Reserve System?
A) Federal Reserve Banks
B) The Comptroller of the Currency
C) The Board of Governors
D) The Federal Open Market Committee
9) That several hundred S&Ls were not even examined once in the period January 1984
through June 1986 can be explained by
A) Congress’s unwillingness to allocate the necessary funds to thrift regulators
B) regulators’ reluctance to find the specific problem thrifts that they knew existed
C) slower growth in lending meant that less regulation was needed
D) Congress’s unwillingness to listen to campaign contributors
10) ________ money could be used for some other purpose other than as a medium of
exchange, for example, gold coins could be melted down and turned into gold jewelry
A) Commodity
B) Fiat
C) Paper
D) Electronic
11) In the Keynesian cross diagram, a decline in autonomous consumer expenditure
causes the aggregate demand function to shift ________ and the equilibrium level of
aggregate output to ________, everything else held constant
A) up; rise
B) up; fall
C) down; rise
D) down; fall
12) Suppose the US economy is producing at the natural rate of output An appreciation
of the US dollar will cause ________ in real GDP in the short run and ________ in
inflation in the long run, everything else held constant (Assume the appreciation causes
no effects in the supply side of the economy)
A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease
13) Everything else held constant, a change in workers’ expectations about inflation will
cause ________ to change
A) aggregate demand
B) short-run aggregate supply
C) the production function
D) long-run aggregate supply
14) If the economy is on the LM curve, but is to the right of the IS curve, aggregate
output will ________ and the interest rate will ________
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
15) A credit-driven bubble arises when ________ in lending causes ________ in asset
prices which can cause ________ in lending
A) a decrease; a decrease; an increase
B) a decrease; an increase; an increase
C) an increase; an increase; a further increase
D) a decrease; a decrease; a further decrease
16) A ________ in market interest rates relative to the discount rate will cause discount
borrowing to ________
A) fall; increase
B) rise; decrease
C) rise; increase
D) fall; remain unchanged
17) The price of one country’s currency in terms of another country’s currency is called
the
A) exchange rate
B) interest rate
C) Dow Jones industrial average
D) prime rate
18) In the loanable funds framework, the ________ is measured on the vertical axis
A) price of bonds
B) interest rate
C) quantity of bonds
D) quantity of loanable funds