1) Using the information contained in Situation 20-1, if autonomous consumption
increases by $100, then equilibrium aggregate output will change by
A) -$1,000
B) -$100
C) $100
D) $1,000
2) ________ policy involves decisions about government spending and taxation
A) Monetary
B) Fiscal
C) Financial
D) Systemic
3) On January 25, 2009, one US dollar traded on the foreign exchange market for about
115 Swiss francs Therefore, one Swiss franc would have purchased about ________ US
dollars
A) 030
B) 087
C) 115
D) 310
4) Since the abandonment of the Bretton Woods system, balance of payments
considerations have become ________ important, and exchange rate considerations
________ important in the conduct of monetary policy
A) more; less
B) more; more
C) less; less
D) less; more
5) The type of monetary policy that is used in Canada, New Zealand, and the United
Kingdom is
A) monetary targeting
B) inflation targeting
C) targeting with an implicit nominal anchor
D) interest-rate targeting
6) Off-balance-sheet activities
A) generate fee income with no increase in risk
B) increase bank risk but do not increase income
C) generate fee income but increase a bank’s risk
D) generate fee income and reduce risk
7) Information plays an important role in asset pricing because it allows the buyer to
more accurately judge
A) liquidity
B) risk
C) capital
D) policy
8) Which of the following is not a disadvantage to inflation targeting?
A) There is a delayed signal about achievement of the target
B) Inflation targets could impose a rigid rule on policymakers
C) There is potential for larger output fluctuations
D) There is a lack of transparency
9) If a bank has excess reserves of $5,000 and demand deposit liabilities of $80,000,
and if the reserve requirement is 20 percent, then the bank has actual reserves of
A) $11,000
B) $20,000
C) $21,000
D) $26,000
10) Secondary markets make financial instruments more
A) solid
B) vapid
C) liquid
D) risky
11) The facility that was created in December of 2007 that banks can use to borrow
from the Fed that has less of a stigma for banks compared to borrowing from the
discount window is the
A) Term Securities Lending Facility
B) Term Auction Facility
C) Primary Dealer Credit Facility
D) Commercial Paper Funding Facility
12) From 1980 to early 1985 the dollar ________ in value, thereby benefiting American
________
A) appreciated; consumers
B) appreciated, businesses
C) depreciated; consumers
D) depreciated, businesses
13) Of the following sources of external finance for American nonfinancial businesses,
the least important is
A) loans from banks
B) stocks
C) bonds and commercial paper
D) loans from other financial intermediaries
14) To maintain fixed exchange rates when countries had balance of payments deficits
and were losing international reserves, the ________ would loan ________ countries
international reserves contributed by other members
A) IMF; deficit
B) IMF; surplus
C) World Bank; deficit
D) World Bank; surplus
15) Banks will be examined at least once a year and given a CAMELS rating by
examiners The L stands for
A) liabilities
B) liquidity
C) loans
D) leverage
16) When the Federal Reserve purchases a government bond from a bank, reserves in
the banking system ________ and the monetary base ________, everything else held
constant
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases