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1) If your nominal income in 1998 is $50,000, and prices increase by 50% between
1998 and 2011, then to have the same real income, your nominal income in 2011 must
be
A) $50,000
B) $75,000
C) $100,000
D) $150,000
2) Under the Bretton Woods system, the IMF could encourage deficit countries to
pursue contractionary monetary policies that would ________ their currency or
eliminate their balance of payment ________
A) strengthen; surpluses
B) strengthen; deficits
C) weaken; surpluses
D) weaken; deficits
3) A decrease in the domestic interest rate causes the demand for domestic assets to
shift to the ________ and the domestic currency to ________, everything else held
constant
A) right; appreciate
B) right; depreciate
C) left; appreciate
D) left; depreciate
4) If an individual redeems a US savings bond for currency
A) M1 stays the same and M2 decreases
B) M1 increases and M2 increases
C) M1 increases and M2 stays the same
D) M1 stays the same and M2 stays the same
5) The president from which Federal Reserve Bank always has a vote in the Federal
Open Market Committee?
A) Philadelphia
B) Boston
C) San Francisco
D) New York
6) The German central bank gained international reserves in the early 1970s because it
sold ________ to prevent mark ________
A) marks; appreciation
B) dollars; appreciation
C) marks; depreciation
D) dollars; depreciation
7) Both France and the United Kingdom successfully used exchange-rate targeting to
lower inflation in the late 1980s and early 1990s by tying the value of their currencies
to the
A) US dollar
B) German mark
C) Swiss franc
D) Euro
8) The three players in the money supply process include
A) banks, depositors, and the US Treasury
B) banks, depositors, and borrowers
C) banks, depositors, and the central bank
D) banks, borrowers, and the central bank
9) If the aggregate price level adjusts slowly over time, then an expansionary monetary
policy lowers
A) only the short-term nominal interest rate
B) only the short-term real interest rate
C) both the short-term nominal and real interest rates
D) the short-term nominal, the short-term real, and the long-term real interest rates
10) If aggregate output is below the natural rate level, nonactivists of policies would
recommend that the government
A) do nothing
B) try to eliminate the high unemployment by attempting to shift the aggregate supply
curve to the right
C) try to eliminate the high unemployment by attempting to shift the aggregate demand
curve to the right
D) try to eliminate the high unemployment by attempting to shift the aggregate demand
curve to the left
11) The oldest central bank, having been founded in 1694, is the
A) Bank of England
B) Deutsche Bundesbank
C) Bank of Japan
D) Federal Reserve System
12) Agency problems in the subprime mortgage market included all of the following
except
A) homeowners could refinance their houses with larger loans when their homes
appreciated in value
B) mortgage originators had little incentives to make sure that the mortgage is a good
credit risk
C) underwriters of mortgage-backed securities had weak incentives to make sure that
the holders of the securities would be paid back
D) the evaluators of securities, the credit rating agencies, were subject to conflicts of
interest
