question
If domestic residents of France purchase 1.2 trillion euros of foreign assets and foreigners purchase 1.5 trillion euros of French assets, then France's net capital outflow is:
a. -.3 trillion euros, so it must have a trade deficit.
b. -.3 trillion euros, so it must have a trade surplus.
c. .3 trillion euros, so it must have a trade deficit.
d. .3 trillion euros, so it must have a trade surplus.
a. -.3 trillion euros, so it must have a trade deficit.
b. -.3 trillion euros, so it must have a trade surplus.
c. .3 trillion euros, so it must have a trade deficit.
d. .3 trillion euros, so it must have a trade surplus.
answer
a. -.3 trillion euros, so it must have a trade deficit
question
Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austria's net capital outflow?
a. Carl's
b. Carly's
c. both Carl's and Carly's
d. neither Carl's nor Carly's
a. Carl's
b. Carly's
c. both Carl's and Carly's
d. neither Carl's nor Carly's
answer
c. Both Carl's and Carly's
question
If saving is less than domestic investment, then:
a. there is a trade deficit and Y > C + I + G.
b. there is a trade deficit and Y < C + I + G.
c. there is a trade surplus and Y > C + I + G.
d. there is a trade surplus and Y < C + I + G.
a. there is a trade deficit and Y > C + I + G.
b. there is a trade deficit and Y < C + I + G.
c. there is a trade surplus and Y > C + I + G.
d. there is a trade surplus and Y < C + I + G.
answer
b. there is a trade deficit and Y < C + I + G.
question
A country has $100 million of net exports and $170 million of saving. Net capital outflow is:
a. $70 million and domestic investment is $170 million.
b. $70 million and domestic investment is $270 million.
c. $100 million and domestic investment is $70 million.
d. None of the above is correct
a. $70 million and domestic investment is $170 million.
b. $70 million and domestic investment is $270 million.
c. $100 million and domestic investment is $70 million.
d. None of the above is correct
answer
c. $100 million and domestic investment is $70 million
question
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.
a. store of value, medium of exchange, unit of account
b. store of value, unit of account, medium of exchange
c. medium of exchange, unit of account, store of value
d. medium of exchange, store of value, unit of account
a. store of value, medium of exchange, unit of account
b. store of value, unit of account, medium of exchange
c. medium of exchange, unit of account, store of value
d. medium of exchange, store of value, unit of account
answer
b. store of value, unit of account, medium of exchange
question
The money stock in the economy is
a. the amount of wealth accumulating in the economy, such as currency and demand deposits.
b. the amount of wealth accumulating in the economy, such as money market mutual funds and stocks.
c. the quantity of money circulating in the economy, such as currency and demand deposits.
d. the quantity of money circulating in the economy, such as money market mutual funds and stock
a. the amount of wealth accumulating in the economy, such as currency and demand deposits.
b. the amount of wealth accumulating in the economy, such as money market mutual funds and stocks.
c. the quantity of money circulating in the economy, such as currency and demand deposits.
d. the quantity of money circulating in the economy, such as money market mutual funds and stock
answer
c. the quantity of money circulating in the economy, such as currency and demand deposits
question
The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept:
a. cigarettes in exchange for goods and services, because they were convinced that cigarettes were going to soon become hard to come by.
b. American dollars in exchange for goods and services, because rubles were extremely hard to come by.
c. goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money.
d. All of the above are correct.
a. cigarettes in exchange for goods and services, because they were convinced that cigarettes were going to soon become hard to come by.
b. American dollars in exchange for goods and services, because rubles were extremely hard to come by.
c. goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money.
d. All of the above are correct.
answer
c. goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money
question
An open-market purchase:
a. increases the number of dollars and the number of bonds in the hands of the public.
b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.
c. decreases the number of dollars and the number of bonds in the hands of the public.
d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.
a. increases the number of dollars and the number of bonds in the hands of the public.
b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.
c. decreases the number of dollars and the number of bonds in the hands of the public.
d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.
answer
b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public
question
If the reserve ratio is 5 percent, then $500 of additional reserves can create up to:
a. $10,500 of new money.
b. $10,000 of new money.
c. $9,500 of new money.
d. $2,500 of new money.
a. $10,500 of new money.
b. $10,000 of new money.
c. $9,500 of new money.
d. $2,500 of new money.
answer
b. $10,000 of new money
question
At any meeting of the Federal Open Market Committee, that committee's voting members consist of:
a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
b. 5 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.
c. 12 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
d. 12 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.
a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
b. 5 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.
c. 12 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
d. 12 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.
answer
a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors
question
To increase the money supply, the Fed can:
a. buy government bonds or increase the discount rate.
b. buy government bonds or decrease the discount rate.
c. sell government bonds or increase the discount rate.
d. sell government bonds or decrease the discount rate.
a. buy government bonds or increase the discount rate.
b. buy government bonds or decrease the discount rate.
c. sell government bonds or increase the discount rate.
d. sell government bonds or decrease the discount rate.
answer
b. buy government bonds or decrease the discount rate
question
The banking system currently has $50 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time sells $10 billion worth of bonds, then by how much does the money supply change?
a. It falls by $20 billion.
b. It falls by $110 billion.
c. It falls by $180 billion.
d. None of the above is correct.
a. It falls by $20 billion.
b. It falls by $110 billion.
c. It falls by $180 billion.
d. None of the above is correct.
answer
c. It falls by $180 billion
question
A bank's reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to:
a. $114.
b. $2,166.
c. $2,400.
d. $45,600.
a. $114.
b. $2,166.
c. $2,400.
d. $45,600.
answer
d. $45,600
question
In December 1999 people feared that there might be computer problems at banks as the century changed. Consequently, people wanted to hold relatively more in currency and relatively less in deposits. In anticipation banks raised their reserve ratios to have enough cash on hand to meet depositors' demands. These actions by the public:
a. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
b. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.
c. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.
a. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
b. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.
c. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.
answer
d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds
question
If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by:
a. buying bonds. This buying would increase the money supply.
b. buying bonds. This buying would reduce the money supply.
c. selling bonds. This selling would increase the money supply.
d. selling bonds. This selling would reduce the money supply.
a. buying bonds. This buying would increase the money supply.
b. buying bonds. This buying would reduce the money supply.
c. selling bonds. This selling would increase the money supply.
d. selling bonds. This selling would reduce the money supply.
answer
d. selling bonds. This selling would reduce the money supply
question
Deflation:
a. increases incomes and enhances the ability of debtors to pay off their debts.
b. increases incomes and reduces the ability of debtors to pay off their debts.
c. decreases incomes and enhances the ability of debtors to pay off their debts.
d. decreases incomes and reduces the ability of debtors to pay off their debts.
a. increases incomes and enhances the ability of debtors to pay off their debts.
b. increases incomes and reduces the ability of debtors to pay off their debts.
c. decreases incomes and enhances the ability of debtors to pay off their debts.
d. decreases incomes and reduces the ability of debtors to pay off their debts.
answer
d. decreases incomes and reduces the ability of debtors to pay off their debts
question
If P denotes the price of goods and services measured in terms of money, then:
a. 1/P represents the value of money measured in terms of goods and services.
b. P can be interpreted as the inflation rate.
c. the supply of money influences the value of P, but the demand for money does not.
d. All of the above are correct.
a. 1/P represents the value of money measured in terms of goods and services.
b. P can be interpreted as the inflation rate.
c. the supply of money influences the value of P, but the demand for money does not.
d. All of the above are correct.
answer
a. 1/P represents the value of money measured in terms of goods and services
question
A decrease in the money supply creates an excess:
a. supply of money that is eliminated by rising prices.
b. supply of money that is eliminated by falling prices.
c. demand for money that is eliminated by rising prices.
d. demand for money that is eliminated by falling prices.
a. supply of money that is eliminated by rising prices.
b. supply of money that is eliminated by falling prices.
c. demand for money that is eliminated by rising prices.
d. demand for money that is eliminated by falling prices.
answer
d. demand for money that is eliminated by falling prices
question
If a bank posts a nominal interest rate of 4 percent, and inflation is expected to be 3 percent, then:
a. the expected real interest rate is 7 percent.
b. the expected real interest rate is 1 percent.
c. the expected real interest rate is 1.33 percent.
d. the expected real interest rate is 12 percent.
a. the expected real interest rate is 7 percent.
b. the expected real interest rate is 1 percent.
c. the expected real interest rate is 1.33 percent.
d. the expected real interest rate is 12 percent.
answer
b. the expected real interest rate is 1 percent
question
The Fisher effect:
a. says the government can generate revenue by printing money.
b. says there is a one for one adjustment of the nominal interest rate to the inflation rate.
c. explains how higher money supply growth leads to higher inflation.
d. explains how prices adjust to obtain equilibrium in the money market
a. says the government can generate revenue by printing money.
b. says there is a one for one adjustment of the nominal interest rate to the inflation rate.
c. explains how higher money supply growth leads to higher inflation.
d. explains how prices adjust to obtain equilibrium in the money market
answer
b. says there is a one for one adjustment of the nominal interest rate to the inflation rate
question
If there is inflation, then a firm that has kept its price fixed for some time will have a:
a. high relative price. Relative-price variability rises as the inflation rate rises.
b. high relative price. Relative-price variability falls as the inflation rate rises.
c. low relative price. Relative-price variability rises as the inflation rate rises.
d. low relative price. Relative-price variability falls as the inflation rate rises.
a. high relative price. Relative-price variability rises as the inflation rate rises.
b. high relative price. Relative-price variability falls as the inflation rate rises.
c. low relative price. Relative-price variability rises as the inflation rate rises.
d. low relative price. Relative-price variability falls as the inflation rate rises.
answer
c. low relative price. Relative-price variability rises as the inflation rate rises
question
The principle of monetary neutrality implies that an increase in the money supply will:
a. increase real GDP and the price level.
b. increase real GDP, but not the price level.
c. increase the price level, but not real GDP.
d. increase neither the price level nor real GDP.
a. increase real GDP and the price level.
b. increase real GDP, but not the price level.
c. increase the price level, but not real GDP.
d. increase neither the price level nor real GDP.
answer
c. increase the price level, but not real GDP
question
You bought some shares of stock and sell them one year later. At the end of the year, the price per share was 5 percent higher and the price level was 3 percent higher. Before taxes, you experienced:
a. both a nominal gain and a real gain, and you paid taxes on the nominal gain.
b. both a nominal gain and a real gain, and you paid taxes only on the real gain.
c. a nominal gain and a real loss, and you paid taxes on the nominal gain.
d. a nominal gain and a real loss, and you paid no taxes on the transaction.
a. both a nominal gain and a real gain, and you paid taxes on the nominal gain.
b. both a nominal gain and a real gain, and you paid taxes only on the real gain.
c. a nominal gain and a real loss, and you paid taxes on the nominal gain.
d. a nominal gain and a real loss, and you paid no taxes on the transaction.
answer
a. both a nominal gain and a real gain, and you paid taxes on the nominal gain
question
If inflation is higher than what was expected,
a. creditors receive a lower real interest rate than they had anticipated.
b. creditors pay a lower real interest rate than they had anticipated.
c. debtors receive a higher real interest rate than they had anticipated.
d. debtors pay a higher real interest rate than they had anticipated.
a. creditors receive a lower real interest rate than they had anticipated.
b. creditors pay a lower real interest rate than they had anticipated.
c. debtors receive a higher real interest rate than they had anticipated.
d. debtors pay a higher real interest rate than they had anticipated.
answer
a. creditors receive a lower real interest rate than they had anticipated
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
