A look at the GDP growth data over the past century appears to reveal that
a. active policy has had no effect on the instability of output
b. active policy has made output more unstable
c. active policy is capable of reducing the instability of output
d. GDP growth data tells us nothing about the effectiveness of active policy
Answer:
The ____ is the time between when a given policy is implemented and the time that the
policy begins to affect a nation’s GDP.
a. implementation lag
b. recognition lag
c. impact lag
d. none of the above
Answer:
Which of the following has been the least effective store of value over the past 50
years?
a. gold
b. money
c. Treasury bills
d. common stocks
Answer:
Which of the following events would shift the aggregate supply curve rightward in the
United States?
a. negative population growth occurs
b. the price of oil drops sharply
c. the U.S. dollar depreciates on foreign exchange markets
d. none of the above
Answer:
Which of the following events may directly cause the money supply to fall by $650?
a. a bank sells a security to a dealer for $650
b. a customer of a bank pays off a $650 loan
c. the Federal Reserve sells a security to a dealer for $650
d. all of the above will cause the money supply to fall by $650
Answer:
The ECB is charged with which of the following macroeconomic goals?
a. economic growth
b. full employment
c. price stability
d. all of the above
Answer:
If there are economies of scale in cash management, increases in income will cause
velocity to
a. remain unchanged
b. rise
c. fall
d. not enough information is given to answer the question
Answer:
Which group of economists is likely to believe in a quickly-operating self-correcting
mechanism?
a. Keynesians
b. policy activists
c. policy non-activists
d. none of the above
Answer:
Which of the following is true about the components of GDP from 1960 to 2004?
a. consumption contributed only about 15 percent
b. investment and government spending contributed more than 70 percent
c. net exports tended to be negative
d. none of the above is correct
Answer:
Critics of policy activism believe that self-correcting mechanisms are ____ and
private-sector expenditures are generally ____.
a. powerful; unstable
b. powerful; stable
c. weak; unstable
d. weak; stable
Answer:
The only example of full-bodied money currently in circulation in the United States is
the:
a. $2 bill
b. dime
c. penny
d. none of the above–there aren’t any
Answer:
The Great Depression was characterized by
a. epidemic bank failures
b. severe price deflation
c. high unemployment
d. all of the above
Answer:
Which of the following actions will cause the money supply to eventually increase by a
total of $45,000, assuming a 10% reserve requirement?
a. a purchase of $4,500 of securities by the Fed
b. a deposit of $5,000 cash by a bank customer
c. both of the above
d. neither of the above
Answer:
The policy statement issued at the conclusion of FOMC meetings is termed the
a. General Statement of Economic Conditions
b. Statement of the System Open Market Account
c. policy directive
d. none of the above
Answer:
Attempts to hold unemployment below its natural rate are likely to result in
a. an upward movement along the Phillips curve
b. an upward shifting Phillips curve
c. a downward movement along the Phillips curve
d. a downward shifting Phillips curve
Answer:
Which of the following is not true about M1 today?
a. It includes demand deposits and other checkable deposits.
b. It is the most liquid measure of money.
c. It includes traveler’s checks.
d. Less than 25% of M1 consists of currency.
Answer:
The European Central Bank
a. is both functionally and financially independent
b. is functionally but not financially independent
c. is financially but not functionally independent
d. is represented by none of the above
Answer:
You are considering the purchase of several hundred shares of Schwinn stock, which is
subject to substantial price variability. You are worried that you may be forced to sell
the stock when the price is depressed. This concern may be classified as:
a. market risk
b. reinvestment risk
c. interest-rate risk
d. default risk
Answer:
In the long run, inflation can almost always be attributed to
a. government budget deficits
b. excessive money growth
c. supply shocks
d. none of the above
Answer:
The money supply multiplier varies inversely with
a. k
b. re
c. rr
d. all of the above
Answer:
Suppose, in a given week, that the Treasury’s expenditures are running strongly ahead
of its proceeds from tax receipts and receipts from bond issues. To maintain the base
constant, the Treasury should transfer funds
a. from its account at the Fed to its account at the Treasury
b. from its account at the Fed to its tax and loan accounts
c. from its account at the Treasury to its Federal Reserve account
d. from its tax and loan accounts to its account at the Fed
Answer:
Which of the following is a potential explanation for the behavior of the Federal
Reserve in the early 1930s?
a. The Fed backed off on maintaining low interest rates out of concern for commercial
bank profitability.
b. The Fed was constrained in its monetary policy conduct by international monetary
developments.
c. The Fed was misled in assessing its monetary policy stance because it was looking at
the wrong indicators.
d. All of the above have been advanced as explanations.
Answer:
The disadvantages of open market operations relative to other tools of Fed policy
include which of the following?
a. initiative for the tool is concentrated entirely with the Fed
b. lack of flexibility
c. lack of precision
d. none of the above
Answer:
In the early years of the Fed, the most commonly used policy tool was the ____
instrument.
a. discount policy
b. open market operations
c. reserve requirement
d. none of the above
Answer:
The reserve requirement tool works primarily through its impact on the
a. level of bank reserves
b. money supply multiplier
c. monetary base
d. none of the above
Answer:
Which of the following stock market indices includes many infrequently traded shares?
a. Dow Jones Industrial Average
b. Standard and Poor’s 500
c. NYSE Composite
d. all of the above contain infrequently traded shares
Answer:
As a general rule, Keynesians believe that the most appropriate intermediate target for
the Fed to choose is
a. a money supply target
b. an interest rate target
c. both of the above
d. neither of the above
Answer:
Forward exchange transactions are used
a. to speculate about future exchange rate movements
b. to hedge against exchange rate risk
c. for both of the above
d. for neither of the above
Answer:
Which of the following is most strongly linked to real economic activity?
a. intermediate target variables
b. operating target variables
c. policy tools
d. none of the above
Answer:
The stated focus of the Reagan administration’s economic program of the 1980s was to
a. increase aggregate supply
b. increase aggregate demand
c. decrease aggregate supply
d. decrease aggregate demand
Answer:
As soon as Reagan Savings and Loan makes a loan by crediting a customer’s DDO
account for the amount of the loan
a. Reagan S&L’s excess reserves immediately rise
b. Reagan S&L’s reserves immediately rise
c. Reagan S&L’s required reserves immediately rise
d. all of the above occur
Answer: