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Small-denomination time deposits are part of M2, but not part of M1.
a. True
b. False
The ability of banks to get insurance from______________ encourages banks to take
on a little bit _________ risk than they would in the absence of deposit insurance.
a. the FDIC; less
b. Fannie Mae (FNMA); more
c. the FDIC; more
d. Fannie Mae (FNMA); less
If the Fed were to increase the discount rate so that it was much higher than the federal
funds rate, eventually
a. reserves would decrease and the money supply would decrease.
b. reserves would increase and the money supply would increase.
c. reserves would decrease and the money supply would increase.
d. reserves would increase and the money supply would decrease.
e. there is no impact on reserves or the money supply.
To an economist, it is preferable to
a. assume that all criminals are rational.
b. assume that all criminals are irrational.
c. build a theory based on a rational criminal and then check the evidence.
d. a or b
Exhibit 38-3
Which of the two stocks has a bigger gap between its close price and net earnings per
share?
a. Stock ABC
b. Stock XYZ
c. Both stocks have the same gap between its close price and net earnings per share
d. There is not enough information provided to answer the question.
If the government increased licensing requirements for beauty salons, the supply curve
for salon services would shift to the left.
a. True
b. False
Exhibit 10-5
When TE is $700 billion, what state is
the economy in?
a. TE < TP, individuals are buying less output than firms produce.
b. TE > TP, individuals are buying more output than firms produce.
c. TE = TP, the economy is in equilibrium.
d. TE < TP, individuals are buying more output than firms produce.
e. TE > TP, individuals are buying less output than firms produce.
Exhibit 10-2
Equilibrium Real GDP occurs at
a. $3,000 billion.
b. $1,500 billion.
c. $7,500 billion.
d. $4,000 billion.
e. $4,500 billion.
Which of the following is an example of a participant in the financial sector?
a. commercial banks
b. investment banks
c. hedge funds
d. brokerage firms
e. all of the above
Suppose the economy is self-regulating, the price level is 150, the quantity demanded of
Real GDP and the quantity supplied of Real GDP in the short run both equal $4.3
trillion, and the quantity supplied of Real GDP in the long run is $4.1 trillion.Given all
of this information, we can conclude that the economy ____________ in short run
equilibrium, and that the price level in long run equilibrium will be _____________
than 150.
a. is not; less
b. is; more
c. is; less
d. is not; more
If the federal funds rate falls below the discount rate, banks will decrease their
borrowings from __________ and __________ their borrowings from __________. It
follows that when one bank borrows from __________, reserves in the banking system
__________.
a. other banks; increase; the Fed; another bank; remain unchanged
b. the Fed; decrease; other banks; another bank; remain unchanged
c. other banks; increase; the U.S. Treasury; the Treasury; increase
d. the Fed; increase; other banks; another bank; remain unchanged
e. none of the above
Moral hazard occurs when the parties on once side of the market, who have information
not known to others, self select in a way that adversely affects the parties on the other
side of the market.
a. True
b. False
