a. Money market instrument ![]() |
||
b. Shot-term market instrument ![]() |
||
c. Capital market instrument ![]() |
||
d. One year market instrument ![]() |
a. Corporation ![]() |
||
b. Individual ![]() |
||
c. Government ![]() |
||
d. All of the above ![]() |
a. C is a financial intermediary. ![]() |
||
b. B is a financial intermediary. ![]() |
||
c. A is a financial intermediary. ![]() |
||
d. A, B, and C do not fulfill any financial role. ![]() |
a. Bond ![]() |
||
b. Equity ![]() |
||
c. Receivable ![]() |
||
d. Credit ![]() |
a. Bond ![]() |
||
b. Equity ![]() |
||
c. Receivable ![]() |
||
d. Credit ![]() |
a. Equity market instruments ![]() |
||
b. Capital Market instruments ![]() |
||
c. Short-term debt instruments ![]() |
||
d. Medium-term instruments ![]() |
a. Primary market ![]() |
||
b. Ten-year market ![]() |
||
c. Short-term market ![]() |
||
d. Secondary market ![]() |
a. borrowers get loans by falsely presenting how profitable their projects really are. ![]() |
||
b. borrowers do not get the loans, because they suffer discrimination. ![]() |
||
c. lenders do not lend to borrowers with bad credit. ![]() |
||
d. lenders lend only to borrowers with good credit. ![]() |
a. Less than one year. ![]() |
||
b. More than one year. ![]() |
||
c. Any number of years. ![]() |
||
d. Usually ten years. ![]() |
a. Less than one year. ![]() |
||
b. More than one year. ![]() |
||
c. Any number of years. ![]() |
||
d. Usually ten years. ![]() |
a. the federal government sells overnight securities. ![]() |
||
b. the federal government buys overnight securities. ![]() |
||
c. banks reserves at the Federal Reserve are bought and sold overnight. ![]() |
||
d. the Federal Reserve Bank loans overnight funds to banks. ![]() |
a. Separating creditworthy borrowers from non-credit worthy borrowers ![]() |
||
b. Not knowing borrowers who will take more risk after the loan contract than those who will not ![]() |
||
c. Providing incentives for borrowers to behave responsibly ![]() |
||
d. Punishing borrowers when they default on their loan contracts ![]() |
a. This is true, because that is only when you can use it to buy something. ![]() |
||
b. This is true, because money has to be a commodity. ![]() |
||
c. This is false, because money is an accounting device that does not need be tangible. ![]() |
||
d. None of the above ![]() |
a. Any corporation looking for funds ![]() |
||
b. Corporations emerging from bankruptcy that need funds ![]() |
||
c. Corporations with strong credit ratings that need funds ![]() |
||
d. Corporations that have the approval of the Board of Directors ![]() |
a. lower cost; economies of scale ![]() |
||
b. lower cost; adverse selection ![]() |
||
c. higher cost; economies of scale ![]() |
||
d. higher cost; adverse selection ![]() |
a. lower risk; spreading it among many ![]() |
||
b. lower risk: confining it to the very rich ![]() |
||
c. raise risk; charging higher interest rates ![]() |
||
d. raise risk; charging lower interest rates ![]() |
a. high risks, diversified ![]() |
||
b. low risks, large to securitize ![]() |
||
c. no risk, diversified ![]() |
||
d. no risk, fully diversified ![]() |
a. less economic growth; will not borrow at low interest rates ![]() |
||
b. less economic growth; cannot have access to loans ![]() |
||
c. more economic growth; are force to used their own funds ![]() |
||
d. more economic growth; can borrow from banks ![]() |
a. commercial banks, give out loans ![]() |
||
b. commercial banks, foreclose on properties ![]() |
||
c. investment banks, guarantee security prices and buy them ![]() |
||
d. investment banks, guarantee security prices and sell them ![]() |
a. the stock market, loan ![]() |
||
b. the capital market, equity ![]() |
||
c. an investment bank, initial public offering (IPO) ![]() |
||
d. commercial bank, initial public offering (IPO) ![]() |
a. Reducing moral hazard ![]() |
||
b. Increasing moral hazard ![]() |
||
c. Withholding information from borrowers ![]() |
||
d. Paying attention to borrowers ![]() |
a. Lends its own funds money to borrowers ![]() |
||
b. Holds deposits for depositors and charges fees for the service ![]() |
||
c. Takes deposits from depositors and lends them to borrowers ![]() |
||
d. Seeks borrowers for depositors ![]() |
a. They enable entrepreneurs without funds to have access to funds. ![]() |
||
b. They make the wealthy wealthier. ![]() |
||
c. They enable investment bankers to earn higher salaries. ![]() |
||
d. They make people with capital gains income pay lower taxes. ![]() |
a. They match borrowers who have productive business ideas with savers. ![]() |
||
b. They enable lenders to minimize the time it takes to find a borrower. ![]() |
||
c. They enable borrowers to minimize the time it takes to find a lender. ![]() |
||
d. All of the above ![]() |
a. Money lender ![]() |
||
b. Intermediary ![]() |
||
c. Broker ![]() |
||
d. Dealer ![]() |
a. Money stores value. ![]() |
||
b. Money is used to measure the value of things. ![]() |
||
c. Money is used to buy goods and services. ![]() |
||
d. Money has no value. ![]() |
a. This economy is not a monetary economy, because shells are not money. ![]() |
||
b. This economy is not a monetary economy, because there are no denominations. ![]() |
||
c. This economy is a monetary economy, because all the functions of money are being performed. ![]() |
||
d. This economy is a monetary economy, because they use gold. ![]() |
a. Income ![]() |
||
b. Money ![]() |
||
c. Insurance for when you want to chew gum ![]() |
||
d. Something to barter with ![]() |
a. The lender and the borrower ![]() |
||
b. The lender the borrower and the intermediary ![]() |
||
c. The borrower and the bank ![]() |
||
d. The lender and the bank ![]() |
a. Financial liabilities ![]() |
||
b. Financial assets ![]() |
||
c. Bank securities ![]() |
||
d. Mortgage-backed securities ![]() |
a. Direct borrowing ![]() |
||
b. Direct financing ![]() |
||
c. Direct lending ![]() |
||
d. Indirect financing ![]() |
a. Money market instruments ![]() |
||
b. Equity market instruments ![]() |
||
c. Mortgage-backed securities ![]() |
||
d. Commercial papers ![]() |
a. Medium of exchange, store of value, and unit of account ![]() |
||
b. Medium of exchange, store of value, and income ![]() |
||
c. Store of value and income ![]() |
||
d. Store of value and a payment mechanism ![]() |
a. Undertakes a less risky business venture after obtaining a loan ![]() |
||
b. Undertakes a more risky business venture after obtaining a loan ![]() |
||
c. Absconds with the loan proceeds and does not repay ![]() |
||
d. Suffers a setback through no fault of his/hers and is unable to repay ![]() |
a. Refinance ![]() |
||
b. Direct finance ![]() |
||
c. Indirect finance ![]() |
||
d. Financial market transaction ![]() |
a. Short-term debt instruments ![]() |
||
b. Capital market instruments ![]() |
||
c. Equity market instruments ![]() |
||
d. Long-term debt instruments ![]() |
a. Individuals ![]() |
||
b. Partnerships ![]() |
||
c. Corporations ![]() |
||
d. Governments ![]() |
a. Money ![]() |
||
b. Income ![]() |
||
c. Interest ![]() |
||
d. Rents ![]() |
a. Domestic corporations ![]() |
||
b. Individuals ![]() |
||
c. Governments ![]() |
||
d. Foreign corporations ![]() |
a. Long-term instruments issued by large banks and well-known corporations ![]() |
||
b. Short-term instruments issued by large banks and well-known corporations ![]() |
||
c. Medium-term instruments issued by corporations who cannot borrow from banks ![]() |
||
d. Long-term instruments issued by corporation who do not want to borrow from banks ![]() |
a. Corporate bonds that allow the holder to convert them into shares ![]() |
||
b. Corporate bonds that can be converted into cash at any time ![]() |
||
c. Corporate bonds that have no maturity dates ![]() |
||
d. Corporate bonds that have maturity dates determined by the bondholder ![]() |
a. Capital market instruments ![]() |
||
b. Money market instruments ![]() |
||
c. Short-term market instruments ![]() |
||
d. Over-the-counter market instruments ![]() |
a. U.S. dollars which an individual takes on vacation to Europe ![]() |
||
b. Bonds issued in Europe but denominated in U.S. dollars ![]() |
||
c. U.S. dollar deposits owned by Europeans ![]() |
||
d. U.S. dollars deposited in banks outside the United States ![]() |
a. Capital market instruments ![]() |
||
b. Money market instruments ![]() |
||
c. Over-the-market instruments ![]() |
||
d. Equity market instrument ![]() |
a. A bond issued and sold in the UK but denominated in U.S. dollars ![]() |
||
b. A bond issued by the European Union ![]() |
||
c. Any bond issued by any country in Europe ![]() |
||
d. A bond issued in the U.S. in dollars but bought by Europeans ![]() |
a. A market where new securities are bought and sold ![]() |
||
b. A market where U.S. government treasuries are bought and sold ![]() |
||
c. A market where newly issued and outstanding securities are bought and sold ![]() |
||
d. A market where outstanding securities are bought and sold ![]() |
a. A loan to buy an asset ![]() |
||
b. A loan with an asset as collateral ![]() |
||
c. A loan with no asset as collateral ![]() |
||
d. A loan with a co-signer ![]() |
a. The Federal Funds rate is the interest rate on loans the Federal Reserve Bank makes to banks. ![]() |
||
b. The Federal Funds rate is the interest rate on loans made in the federal funds market. ![]() |
||
c. The Federal Funds rate is the interest rate on loans the Federal Reserve Bank makes to the government. ![]() |
||
d. The Federal Funds rate is the interest rate on loans banks make to the Federal Reserve Bank. ![]() |
a. There will be no savings. ![]() |
||
b. There will be no income earned. ![]() |
||
c. There will be no money in the economy. ![]() |
||
d. Economic activity will decline. ![]() |
a. Liability ![]() |
||
b. A credit ![]() |
||
c. Equity ![]() |
||
d. An asset ![]() |
a. Securities ![]() |
||
b. Equities ![]() |
||
c. Dividends ![]() |
||
d. Credits ![]() |
a. An asset ![]() |
||
b. A liability ![]() |
||
c. A debt ![]() |
||
d. A credit ![]() |
a. Security ![]() |
||
b. Equity ![]() |
||
c. Commercial paper ![]() |
||
d. Certificate of deposit ![]() |
a. They are able to reduce transaction costs through economies of scale. ![]() |
||
b. They are able to lend large sums of money to those who need it. ![]() |
||
c. They employ of a lot of people to market their loans. ![]() |
||
d. They have good management skills. ![]() |
a. Anything that the government says is money ![]() |
||
b. Anything that provides utility for people ![]() |
||
c. Anything that is generally acceptable as a medium of exchange ![]() |
||
d. Anything that is desirable, because it can be consumed ![]() |
a. ABC Corporation uses its retained earnings to finance a new project. ![]() |
||
b. ABC Corporation sells its old equipment to finance a new project. ![]() |
||
c. ABC Corporation raises funds by selling commercial paper to DEF Finance Company. ![]() |
||
d. ABC Corporation raises funds by borrowing from its bank. ![]() |
a. Households ![]() |
||
b. Households and businesses ![]() |
||
c. Households, businesses, and governments ![]() |
||
d. Households, businesses, governments, and foreigners ![]() |
a. Because the interest rates on them are higher than the interest rate on corporate bonds ![]() |
||
b. Because the interest rates are exempt from federal income tax ![]() |
||
c. Because they are short-term instruments and therefore very liquid ![]() |
||
d. Because the capital gains on them are higher than on many securities ![]() |
a. They can make a lot of people wealthy. ![]() |
||
b. They can make businesses and people wealthy. ![]() |
||
c. They make it possible to transfer savings to borrowers. ![]() |
||
d. They make it possible for governments to borrow. ![]() |
a. It makes it easier for firms to sell new bonds in the primary market. ![]() |
||
b. It makes it easier for firms to sell new bonds in the secondary market. ![]() |
||
c. It makes it easier for firms to sell new bonds in both the secondary and primary markets. ![]() |
||
d. It makes it easier for firms to buy and sell new bonds in the secondary and a primary markets. ![]() |
a. It moves more funds from savers to borrowers than direct finance. ![]() |
||
b. It moves as much funds from savers to borrowers as direct finance. ![]() |
||
c. It is the only means by which funds can move from savers to borrowers. ![]() |
||
d. It is responsible for all the economic activity in the U.S. ![]() |
a. People could not trade. ![]() |
||
b. People would not want to work, because there would be no money to pay them. ![]() |
||
c. People would take time away from work to search for trading partners. ![]() |
||
d. People would produce only what they want to consume. ![]() |
a. Nobody would want to borrow from them, because their funds would be too small. ![]() |
||
b. Nobody would want to borrow from them, because they are not banks. ![]() |
||
c. The cost of a one-time loan of a small amount would be too high to make it worth their while to lend. ![]() |
||
d. The return on lending would be too high for them to want to lend. ![]() |
a. The commercial paper is more attractive to investors. ![]() |
||
b. The commercial paper is less risky. ![]() |
||
c. The U.S. government bond is more liquid. ![]() |
||
d. The U.S. government bond is riskier. ![]() |
a. The interest rate on the loan is zero. ![]() |
||
b. The real interest rate on the loan is zero. ![]() |
||
c. The nominal interest rate on the loan is zero. ![]() |
||
d. The nominal interest rate on the loan is equal to the real interest rate. ![]() |
a. In real terms, Jane paid less than she expected to pay. ![]() |
||
b. In real terms, Jane paid more than she expected to pay. ![]() |
||
c. In nominal terms, Jane paid more than she expected to pay. ![]() |
||
d. Jane paid no more nor less than she expected to pay. ![]() |
a. there is a higher demand for Greek Sovereign Bonds than there is for German Sovereign Bonds. ![]() |
||
b. Greek Sovereign Bonds are more liquid than German Sovereign Bonds. ![]() |
||
c. Greek Sovereign Bonds are more risky than German Sovereign Bonds. ![]() |
||
d. there is a lower demand for German Sovereign Bonds than there is for Greek Sovereign Bonds. ![]() |
a. the more risky it is. ![]() |
||
b. the more liquid it is. ![]() |
||
c. the less desirable it is. ![]() |
||
d. the higher the interest rate it pays. ![]() |
a. Less than the sum of the stream of payments. ![]() |
||
b. More than the sum of the stream of payments. ![]() |
||
c. About the same as the sum of the stream of payments. ![]() |
||
d. Exactly equal to the sum of the stream payments. ![]() |
a. The interest rate ![]() |
||
b. The discount rate ![]() |
||
c. The nominal interest rate ![]() |
||
d. The real interest rate ![]() |
a. $100.00 ![]() |
||
b. 10.00% ![]() |
||
c. 90.91% ![]() |
||
d. 9.09% ![]() |
a. The same as the simple interest rate ![]() |
||
b. Greater than the simple interest rate ![]() |
||
c. Less than the simple interest rate ![]() |
||
d. Cannot be determined from the given information ![]() |
a. The price of the security will increase, and the interest rate will increase. ![]() |
||
b. The price of the security will increase, and the interest rate will decrease. ![]() |
||
c. The price of the security will decrease, and the interest rate will decrease. ![]() |
||
d. The price of the security will decrease, and the interest rate will increase. ![]() |
a. The spread between the interest rates on default-free and default-risk bonds of the same maturity ![]() |
||
b. The spread between interest rates on default-free and default risk bonds with different maturities ![]() |
||
c. The yield to maturity plus the expected inflation over the period the bond is held ![]() |
||
d. The yield to maturity plus the actual inflation over the period the bond is held ![]() |
a. It will increase. ![]() |
||
b. It will decrease. ![]() |
||
c. It will remain the same. ![]() |
||
d. It cannot be determined. ![]() |
a. 2% ![]() |
||
b. 2.5% ![]() |
||
c. 3.0% ![]() |
||
d. 5.0% ![]() |
a. Downward sloping ![]() |
||
b. Flat ![]() |
||
c. Upward Sloping ![]() |
||
d. Flat then upward sloping ![]() |
a. The demand for securities ![]() |
||
b. The supply of securities ![]() |
||
c. The demand and supply of securities ![]() |
||
d. The needs of banks ![]() |
a. The interest rate falls, and you sell before maturity. ![]() |
||
b. The interest rate rises, and you sell before maturity. ![]() |
||
c. The interest rate does not change, and you sell it at par before maturity. ![]() |
||
d. The interest rate does not change, and you hold it to maturity. ![]() |
a. The difference between the actual interest rate and the observed interest rate ![]() |
||
b. The sum of the nominal interest rate and inflation ![]() |
||
c. The difference between the nominal interest rate and inflation ![]() |
||
d. The difference between the nominal interest rate and the prime rate ![]() |
a. It will increase. ![]() |
||
b. It will decrease. ![]() |
||
c. It will not change. ![]() |
||
d. It cannot be determined since other factors can change. ![]() |
a. The supply will increase, and the interest rate will decrease. ![]() |
||
b. The supply will decrease, and the interest rate will decrease. ![]() |
||
c. The supply will not change, but the interest rate will increase. ![]() |
||
d. The supply will increase, and the interest rate will increase. ![]() |
a. The price will increase, and the interest rate will increase. ![]() |
||
b. The price will increase, and the interest rate will decrease. ![]() |
||
c. The price will decrease, and the interest rate will increase. ![]() |
||
d. The price will decrease, and the interest rate will decrease. ![]() |
a. When the real interest rate is equal to inflation ![]() |
||
b. When the nominal interest rate is greater than the real interest rate ![]() |
||
c. When inflation is greater than the nominal interest rate ![]() |
||
d. When inflation is equal to the nominal interest rate ![]() |
a. Future short-term rates are expected to fall. ![]() |
||
b. Future short-term rates are expected to rise. ![]() |
||
c. Future long-term rates are expected to fall. ![]() |
||
d. Future long-term rates are expected to fall. ![]() |
a. The rate at which the stream of cash flows from an instrument must be discounted to equal its value today ![]() |
||
b. Always the ratio of the price at which the instrument is sold, divided by the price at which it is bought ![]() |
||
c. The rate at which the stream of cash flow must be increased to equal its future value ![]() |
||
d. The difference between the future value and the present value ![]() |
a. Because one hundred dollars a year from now will buy less than one hundred dollars-worth of goods and services ![]() |
||
b. Because one hundred dollars a year from now will buy more than one hundred dollars-worth of goods and services. ![]() |
||
c. Because the statement does not take account of the time value of money ![]() |
||
d. Because people value what they receive in the future more than what they receive today ![]() |
a. U.S. government bonds are riskier than municipal bonds. ![]() |
||
b. U.S. government bonds are less liquid than municipal bonds. ![]() |
||
c. Municipal bonds are less liquid than U.S. government bonds. ![]() |
||
d. Municipal bond interest payments are exempt from federal income taxes. ![]() |
a. U.S. government bonds have shorter maturities than Mexican government bonds. ![]() |
||
b. The U.S. government’s deficit is larger than the Mexican government deficit. ![]() |
||
c. The Mexican government’s debt is the same as the U.S. government’s debt, but the former is default-free. ![]() |
||
d. U.S. government bonds are more liquid than Mexican government bonds. ![]() |
a. The same as the yield to maturity ![]() |
||
b. Greater than the yield to maturity ![]() |
||
c. Less than the yield to maturity ![]() |
||
d. Cannot be calculated ![]() |
a. The same as the fixed interest rate ![]() |
||
b. Higher than the fixed interest rate ![]() |
||
c. Lower than the fixed interest rate ![]() |
||
d. Cannot be calculated ![]() |
a. $1,000.00 ![]() |
||
b. $965.00 ![]() |
||
c. $865.00 ![]() |
||
d. $765.00 ![]() |
a. An insurance company ![]() |
||
b. A pension fund ![]() |
||
c. A depository institution ![]() |
||
d. A finance company ![]() |
a. Lend to sectors that will make the economy grow ![]() |
||
b. Lend to sectors dictated by the government ![]() |
||
c. Avoid excessive risk ![]() |
||
d. Avoid making too much profit ![]() |
a. it makes it costly to borrow and lend. ![]() |
||
b. it makes it costly to lend, so nobody wants to lend. ![]() |
||
c. it makes it cheaper to borrow, so nobody wants to lend. ![]() |
||
d. it makes it cheaper to lend, so nobody wants to lend. ![]() |
a. Maximize profit. ![]() |
||
b. Operate safely. ![]() |
||
c. Minimize cost. ![]() |
||
d. Increase the money supply. ![]() |
a. lower costs; economies of scale ![]() |
||
b. raise costs; economies of scale ![]() |
||
c. raise costs; increasing marginal returns ![]() |
||
d. lower costs; decreasing marginal returns ![]() |
a. the poor; the rich ![]() |
||
b. the government; the poor ![]() |
||
c. the rich; the poor ![]() |
||
d. savers; borrowers ![]() |
a. Moral hazard ![]() |
||
b. Adverse selection ![]() |
||
c. Principal agency problems ![]() |
||
d. Sequential service constraint ![]() |
a. Agency problem ![]() |
||
b. Moral hazard problem ![]() |
||
c. Adverse selection problem ![]() |
||
d. Lending problem ![]() |
a. Disclose information to the public and the government ![]() |
||
b. Disclose information to shareholders ![]() |
||
c. Keep their proprietary information from potential saboteurs ![]() |
||
d. Tell the government whenever they change their portfolio of assets ![]() |
a. To impose capital requirements ![]() |
||
b. To only allow them to buy safe stocks ![]() |
||
c. To appoint the members of the Board of Directors ![]() |
||
d. To only allow them to borrow from the Federal Reserve Bank ![]() |
a. To require them to be under a bank holding company ![]() |
||
b. To require them to buy only preferred common stocks ![]() |
||
c. To supervise their activities ![]() |
||
d. To prevent them from branching ![]() |
a. When they fail, owners of the bank lose their capital. ![]() |
||
b. When they fail, depositors lose their deposits. ![]() |
||
c. When they fail, the government has to bail them out. ![]() |
||
d. When they fail, it causes disruptions in economic activity. ![]() |
a. Maintain price stability ![]() |
||
b. Make the most profit for shareholders ![]() |
||
c. Reduce the price level ![]() |
||
d. Control government spending ![]() |
a. it cannot at the same time control the monetary base. ![]() |
||
b. it cannot at the same time control the reserve deposit ratio. ![]() |
||
c. it cannot at the same time control the interest rate. ![]() |
||
d. it cannot at the same time control the price level. ![]() |
a. Ineffective during both expansions recessions. ![]() |
||
b. Ineffective during recessions. ![]() |
||
c. Ineffective during expansions. ![]() |
||
d. Ineffective at the trough of the business cycle. ![]() |
a. Buy government bonds and thus increase reserves ![]() |
||
b. Sell government bonds and thus increase reserves ![]() |
||
c. Buy government bonds and thus decrease reserves ![]() |
||
d. Sell government bonds and thus decrease reserves ![]() |
a. Alter the required reserve ratio ![]() |
||
b. Alter the currency to deposit ratio ![]() |
||
c. Forbid the banks from taking deposits ![]() |
||
d. Encourage the banks to take more deposits ![]() |
a. Conducting fiscal policy ![]() |
||
b. Conducting monetary policy ![]() |
||
c. Advising the president ![]() |
||
d. Advising Congress ![]() |
a. Conducting open market operations ![]() |
||
b. Conducting closed market operations ![]() |
||
c. Conducting fiscal policy ![]() |
||
d. Chartering state banks ![]() |
a. They prevent the price level from increasing and keep the exchange rate stable. ![]() |
||
b. They prevent the price level from increasing and ensure full employment. ![]() |
||
c. They maintain price stability and ensure full employment. ![]() |
||
d. They maintain price stability and ensure zero unemployment. ![]() |
a. Target the money supply and give up control of the interest rate ![]() |
||
b. Target the price level and increase the money supply ![]() |
||
c. Target both the interest rate and the money supply ![]() |
||
d. Do nothing and let the market decide what the interest rate should be ![]() |
a. The practice of keeping the interest rate within a certain range to achieve some macroeconomic goal ![]() |
||
b. The practice of setting the money supply at a certain level and letting the interest be determined by the market ![]() |
||
c. The practice of banks telling borrowers how much interest rate they will pay for loans ![]() |
||
d. The practice of setting the rate at which the money supply will with the level of interest rate ![]() |
a. To make profit for the government ![]() |
||
b. To make profit for shareholders ![]() |
||
c. To maintain price stability ![]() |
||
d. To increase the money supply ![]() |
a. Altering the reserve deposits ratio ![]() |
||
b. Using moral suasion ![]() |
||
c. Changing margin requirements ![]() |
||
d. Conducting open market operations ![]() |
a. Increase the money supply ![]() |
||
b. Decrease the money supply ![]() |
||
c. Reduce the interest rate ![]() |
||
d. Increase the monetary base ![]() |
a. Money supply to increase and the interest rate and employment to increase ![]() |
||
b. Money supply to increase and the interest rate and employment to decrease ![]() |
||
c. Money supply and the interest rate to increase as well as employment to decrease ![]() |
||
d. Money supply and employment to increase as well as the interest rate to decrease ![]() |
a. FOMC ![]() |
||
b. Federal Advisory Council ![]() |
||
c. Board of Governors ![]() |
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d. Discount Rate Committee ![]() |
a. The government ![]() |
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b. Member banks ![]() |
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c. All the banks in the U.S. ![]() |
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d. Only the state banks ![]() |
a. It will decrease, because more goods can be produced at home. ![]() |
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b. It will remain the same, because they are foreign goods. ![]() |
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c. It will increase, because the demand for all good will increase. ![]() |
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d. Exports from the country will increase, but imports will remain the same. ![]() |
a. U will export more to C. ![]() |
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b. C will export more to U. ![]() |
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c. C will export no more to U than before. ![]() |
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d. U will export nor more to C than before. ![]() |
a. The real exchange rate of U will rise. ![]() |
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b. The real exchange rate of U will fall. ![]() |
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c. The nominal exchange rate of C will rise. ![]() |
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d. The nominal exchange rate of U will fall. ![]() |
a. The real exchange rate of U will fall, and U will import more refrigerators from C. ![]() |
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b. The real exchange rate of U will rise, and U will import more refrigerators from C. ![]() |
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c. The nominal exchange rate of C will rise, and C will import more from U. ![]() |
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d. The nominal exchange rate of C will fall, and C will import more from U. ![]() |
a. if U.S. businesses become less productive. ![]() |
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b. if U.S. citizens choose to vacation at home. ![]() |
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c. if foreigners choose to vacation at home. ![]() |
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d. if U.S. businesses become more productive. ![]() |
a. C’s currency is floating even if U’s currency is not. ![]() |
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b. C’s currency is fixed even if U’s currency is not. ![]() |
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c. U gains no trade advantage against C from devaluing its currency. ![]() |
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d. U and C have currencies that float independently. ![]() |
a. It will fall. ![]() |
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b. It will rise. ![]() |
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c. It will remain the same. ![]() |
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d. It cannot be determined. ![]() |
a. The value of the dollar will decrease compared to the euro. ![]() |
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b. The value of the dollar will increase compared to the euro. ![]() |
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c. The U.S. will export more goods to Europe ![]() |
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d. More U.S. citizens will travel to Europe. ![]() |
a. Fixed exchange rate regime ![]() |
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b. Managed exchange rate regime ![]() |
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c. Demand set exchange rate regime ![]() |
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d. Floating exchange rate regime ![]() |
a. The income of foreigners ![]() |
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b. The preference of foreigners for U.S. goods ![]() |
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c. The income of U.S. residents ![]() |
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d. The desire to accumulate foreign currency ![]() |
a. The amount of euros one U.S. dollar can buy ![]() |
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b. The amount of U.S. dollars one euro can buy ![]() |
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c. The value of U.S. dollars that is exchanged for euros daily ![]() |
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d. The value of goods one U.S. dollar can buy in a euro area ![]() |
a. An increase in the demand for a country’s exports ![]() |
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b. A decrease in the demand for a country’s exports ![]() |
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c. An increase in the country’s imports ![]() |
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d. A reduction in the interest rate in the country ![]() |
a. The foreign exchange market makes it possible to buy foreign goods. ![]() |
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b. The foreign exchange market makes it possible for foreigners to buy our goods. ![]() |
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c. The foreign exchange market makes it possible for countries to show pride in their currencies. ![]() |
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d. Both A and B ![]() |
a. Live without foreign goods ![]() |
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b. Travel abroad to get foreign goods ![]() |
||
c. Produce whatever they wanted to consume ![]() |
||
d. Barter ![]() |
a. The LM curve will shift to the left and decrease the interest rate. ![]() |
||
b. The LM curve will shift to the right and decrease the interest rate. ![]() |
||
c. The IS curve will shift to the right and increase the interest rate. ![]() |
||
d. The IS curve will shift to the right and decrease the interest rate. ![]() |
a. Interest rate falls, and GDP rises. ![]() |
||
b. Interest rate rises, and GDP rises. ![]() |
||
c. Interest rate falls, and GDP rises. ![]() |
||
d. Interest rate rises, and GDP falls. ![]() |
a. is likely to succeed in stabilizing the economy. ![]() |
||
b. is likely to introduce instability in the economy. ![]() |
||
c. will create higher inflation. ![]() |
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d. will create higher deflation. ![]() |
a. 6% ![]() |
||
b. 5% ![]() |
||
c. 3% ![]() |
||
d. 1% ![]() |
a. 8% ![]() |
||
b. 7% ![]() |
||
c. 5% ![]() |
||
d. 1% ![]() |
a. Monetary policy is effective. ![]() |
||
b. Monetary policy is only effective when coupled with fiscal policy. ![]() |
||
c. Fiscal policy is only effective when it is not accommodated by monetary policy. ![]() |
||
d. Monetary policy is ineffective. ![]() |
a. Real GDP cannot be increased by monetary policy. ![]() |
||
b. Real GDP can be increased only by reducing the money supply. ![]() |
||
c. Real GDP can be increased by monetary policy over time. ![]() |
||
d. Only nominal GDP can be increased by monetary policy. ![]() |
a. The amount of money people want to hold at different interest rates ![]() |
||
b. The amount of income people want to hold at different interest rates ![]() |
||
c. The amount of money the central bank wants people to hold at different interest rates ![]() |
||
d. The amount of money supplied by the central bank at different interest rates ![]() |
a. There will be no effect on the interest rate. ![]() |
||
b. The interest rate will increase. ![]() |
||
c. The interest rate will decrease. ![]() |
||
d. The interest rate will immediately fall to zero. ![]() |
a. Lower the interest rate, reduce the demand for money and increase GDP ![]() |
||
b. Lower the interest, increase investment and increase GDP ![]() |
||
c. Raises the interest rate, increase investment and reduce GDP ![]() |
||
d. Raises interest rate, increase investment and reduce GDP ![]() |
a. An increase in money supply will not lower the interest rate. ![]() |
||
b. An increase in the money supply will lower interest rate. ![]() |
||
c. An increase in the money supply will raise the GDP. ![]() |
||
d. An increase in the money supply will lower the GDP. ![]() |
a. The demand for money is positively related to the interest rate but negatively to income. ![]() |
||
b. The demand for money is positively related to the interest rate and positively to income. ![]() |
||
c. The demand for money is negatively related to the interest rate and negatively to income. ![]() |
||
d. The demand for money is negatively related to the interest rate but positively to income. ![]() |
a. They believe that the economy is inherently stable and fiscal policy is more effective than monetary policy in stabilizing the economy. ![]() |
||
b. They believe that the economy is inherently unstable and fiscal policy is more effective than monetary policy in stabilizing the economy. ![]() |
||
c. They believe that monetary policy is too effective in stabilizing an inherently unstable economy and should be used sparingly. ![]() |
||
d. They believe fiscal policy is quick, flexible, and more effective compared to monetary policy in stabilizing the economy. ![]() |
a. They believe that monetary policy will have a bigger impact on nominal income than an increase in government expenditure. ![]() |
||
b. They believe that monetary policy will have as big an impact on nominal income as a change in government expenditure. ![]() |
||
c. They believe that monetary policy will cause real GDP to increase by a larger amount than an increase in government expenditure. ![]() |
||
d. They believe that monetary policy will cause the price level to increase by a larger amount than an increase in government expenditure. ![]() |
a. Because under CMG policy makers are using their discretion ![]() |
||
b. Because under CMG policy makers are not using their discretion ![]() |
||
c. Because under CMG policy makers have flexibility ![]() |
||
d. Because under CMG the money supply can grow at a rate that is variable ![]() |
a. It does not have a recognition lag and is therefore timely. ![]() |
||
b. It is always effective whether the economy is in a recession or in expansion. ![]() |
||
c. It is flexible and can be speedily implemented. ![]() |
||
d. It follows rules that are times tested to be effective. ![]() |
a. The demand for money decreases. ![]() |
||
b. The demand for money increases. ![]() |
||
c. The quantity demanded of money decreases. ![]() |
||
d. The quantity demanded of money increases. ![]() |