1、【单选题】financial markets promote economic efficiency by a、channeling funds from investors to savers. b、creating inflation. c、channeling funds from savers to investors. d、reducing investment.
2、【单选题】financial markets promote greater economic efficiency by channeling funds from ________ to ________. a、investors; savers b、borrowers; savers c、savers; borrowers d、savers; lenders
1.2an overview of the financial system
1、【单选题】every financial market has the following characteristic: a、it determines the level of interest rates. b、it allows common stock to be traded. c、it allows loans to be made. d、it channels funds from lenders-savers to borrowers-spenders.
2、【单选题】financial markets improve economic welfare because a、they channel funds from investors to savers. b、they allow consumers to time their purchase better. c、they weed out inefficient firms. d、eliminate the need for indirect finance.
3、【单选题】markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called a、commodity markets. b、fund-available markets. c、derivative exchange markets. d、financial markets.
4、【单选题】channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower’s security is known as a、barter. b、redistribution. c、financial intermediation. d、taxation.
5、【单选题】financial markets promote economic efficiency by a、channeling funds from investors to savers. b、creating inflation. c、causing recessions. d、channeling funds from savers to investors.
7、【单选题】poorly performing financial markets can be the cause of a、wealth. b、poverty. c、financial stability. d、all of the above.
8、【单选题】the bond markets are important because a、they are easily the most widely followed financial markets in the united states. b、they are the markets where foreign exchange rates are determined. c、they are the markets where interest rates are determined. d、of each of the above.
9、【单选题】a decrease in the growth rate of the money supply is likely followed by a、a recession. b、a recovery. c、a boom. d、inflation.
10、【单选题】a sharp increase in the growth of the money supply is likely followed by a、a recession. b、a depression. c、inflation. d、no change in the economy.
11、【单选题】which of the following can be described as involving direct finance? a、a corporation issues new shares of stock. b、people buy shares in a mutual fund. c、a pension fund manager buys a short-term corporate security in the secondary market. d、an insurance company buys shares of common stock in the over-the-counter markets.
12、【单选题】which of the following can be described as involving direct finance? a、a corporation issues new shares of stock. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys commercial paper in the secondary market. d、both (a) and (b) of the above.
13、【单选题】which of the following can be described as involving direct finance? a、a corporation issues new shares of stock through an investment bank. b、a corporation buys a short-term security paper issued by another corporation. c、a pension fund manager buys commercial paper in the primary market. d、all of the above.
14、【单选题】which of the following can be described as involving direct finance? a、a corporation takes out loans from a bank. b、people buy shares in a mutual fund. c、a corporation buys a short-term corporate security in a secondary market. d、an insurance company buys shares of common stock in the primary markets.
15、【单选题】which of the following can be described as involving direct finance? a、a corporation’s stock is traded in an over-the-counter market. b、people buy shares in a mutual fund. c、an insurance company buys shares of common stock in the over-the-counter markets. d、none of the above.
16、【单选题】which of the following can be described as involving direct finance? a、a corporation’s stock is traded in an over-the-counter market. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys a short-term corporate security from the issuing corporation. d、both (b) and (c) of the above.
17、【单选题】which of the following can be described as involving direct finance? a、a corporation issues new shares of stock. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys a short-term security from the issuing corporation. d、all of the above.
18、【单选题】which of the following can be described as involving indirect finance? a、you make a loan to your neighbor. b、a corporation buys a share of common stock issued by another corporation. c、you buy a u.s. treasury bill from the u.s. treasury. d、you make a deposit at a bank.
19、【单选题】which of the following can be described as involving indirect finance? a、a corporation takes out loans from a bank. b、people buy shares in a mutual fund. c、a corporation buys a short-term security issued by another corporation. d、both (a) and (b) of the above.
20、【单选题】which of the following can be described as involving indirect finance? a、a corporation issues new shares of stock. b、people buy shares in a mutual fund. c、a pension fund manager buys a short-term corporate security in the secondary market. d、both (b) and (c) of the above.
21、【单选题】which of the following can be described as involving indirect finance? a、a corporation issues new shares of stock. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys a short-term corporate security in the secondary market. d、both (a) and (b) of the above.
22、【单选题】which of the following can be described as involving indirect finance? a、a bank buys a u.s. treasury bill from one of its depositors. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys a short-term corporate security the primary market. d、both (b) and (c) of the above.
23、【单选题】which of the following can be described as involving indirect finance? a、a corporation takes out loans from a bank. b、people buy shares in a mutual fund. c、a corporation buys a short-term corporate security in a secondary market. d、all of the above.
24、【单选题】which of the following can be described as involving indirect finance? a、people buy shares in a mutual fund. b、a pension fund manager buys a short-term corporate security in the secondary market. c、a corporation’s stock is issued in an over-the-counter market. d、only (a) and (b) of the above.
25、【单选题】which of the following can be described as involving indirect finance? a、a corporation’s stock is traded in an over-the-counter market. b、a corporation buys a short-term security issued by another corporation. c、a pension fund manager buys a short-term security from the issuing corporation. d、both (a) and (b) of the above.
26、【单选题】which of the following can be described as involving indirect finance? a、a corporation issues new shares of stock. b、a corporation buys a short-term security issued by another corporation. c、a bank buys a u.s. treasury bill from one of its depositors. d、all of the above.
27、【单选题】which of the following can be described as involving indirect finance? a、you make a loan to your neighbor. b、you buy a u.s. treasury bill from the bank. c、you buy a u.s. treasury bill from the u.s. treasury. d、a corporation buys a short-term security issued by another corporation.
28、【单选题】which of the following are securities? a、a corporate bond b、a share of texaco common stock c、a treasury bill d、each of the above
29、【单选题】which of the following statements about the characteristics of debt and equity is untrue? a、they can both be long-term financial instruments. b、they can both be short-term financial instruments. c、they both involve a claim on the issuer’s income. d、they both enable a corporation to raise funds.
30、【单选题】which of the following statements about the characteristics of debt and equity are true? a、they can both be long-term financial instruments. b、they can both be short-term financial instruments. c、they both involve a claim on the issuer’s income. d、both (a) and (c) of the above.
1.3what is money
1、【单选题】money is a、anything that is generally accepted in payment for goods and services or in the repayment of debt. b、a flow of earnings per unit of time. c、the total collection of pieces of property that are a store of value. d、always based on a precious metal like gold or silver.
2、【单选题】kevin purchasing concert tickets with his debit card is an example of the ________ function of money. a、medium of exchange b、unit of account c、store of value d、specialization
3、【单选题】ranking assets from most liquid to least liquid, the correct order is a、savings bonds; house; currency. b、currency; savings bonds; house. c、currency; house; savings bonds. d、house; savings bonds; currency.
4、【单选题】the conversion of a barter economy to one that uses money increases efficiency by reducing a、the need to exchange goods. b、the need to specialize. c、the need to employ team production methods. d、transactions costs.
5、【单选题】the conversion of a barter economy to one that uses money a、increases efficiency by reducing the need to exchange goods and services. b、increases efficiency by reducing the need to specialize. c、increases efficiency by reducing transactions costs. d、does not increase economic efficiency.
6、【单选题】if it is generally acceptable as a medium of exchange then it a、must be a commodity. b、must be a precious metal such as gold or silver. c、is money. d、all of the above.
2.1understanding interest rates
1、【单选题】the present value of an expected future payment ________ as the interest rate increases. a、falls b、rises c、is constant d、is unaffected
2、【单选题】if a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is a、5 percent. b、10 percent. c、12.5 percent. d、15 percent.
3、【单选题】a credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called a a、simple loan. b、fixed-payment loan. c、coupon bond. d、discount bond.
4、【单选题】if a security pays $105 next year and $110 the year after that, what is its yield to maturity if it sells for $200? a、4 percent b、5 percent c、6 percent d、10 percent
5、【单选题】a security that pays $52.50 in one year and $110.25 in two years, with an interest rate of 5 percent, has a present value of a、$150. b、$162.50. c、$200. d、$300.
6、【单选题】if a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is a、5 percent. b、10 percent. c、12.5 percent. d、15 percent.
7、【单选题】for a bond selling for $4000, with a par value of $5000 and a coupon rate of 10 percent, the current yield is a、5 percent. b、10 percent. c、12.5 percent. d、20 percent.
8、【单选题】the current yield on a $5,000, 8 percent coupon bond selling for $4,000 is a、5 percent. b、8 percent. c、10 percent. d、20 percent.
9、【单选题】the current yield on a $6,000, 10 percent coupon bond selling for $5,000 is a、5 percent. b、10 percent. c、12 percent. d、15 percent.
10、【单选题】the current yield on a $10,000, 10 percent coupon bond selling for $5,000 is a、30 percent. b、33 percent. c、60 percent. d、20 percent.
2.2the behavior of interest rates
1、【单选题】if stock prices are expected to drop dramatically, then, other things equal, the demand for stocks will ________ and that of treasury bills will ________. a、increase; increase b、increase; decrease c、decrease; decrease d、decrease; increase
2、【单选题】the economist irving fisher, after whom the fisher effect is named, explained why interest rates ________ as the expected rate of inflation ________, everything else held constant. a、rise; increases b、rise; stabilizes c、fall; stabilizes d、fall; increases
3、【单选题】when the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant. a、demand; decreases; fall b、demand; increases; rise c、supply; increases; rise d、supply; decreases; fall
4、【单选题】when people begin to expect a run up in large stock market, the demand curve for bonds shifts to the _____ and the interest rate _____. a、right; rises b、right; falls c、left; falls d、left; rises
5、【单选题】if the expected return on rst stock falls from 8 to 5 percent and the expected return on xyz stock rises from 3 to 4 percent, then the expected return of holding xyz stock ______ relative to rst stock and demand for xyz stock ______. a、rises; rises b、rises; falls c、falls; rises d、falls; falls
6、【单选题】if the expected return on rst stock declines from to 9 percent and the expected return on xyz stock declines from 8 to 7 percent, then the expected return of holding rst stock ______ relative to xyz stock and demand for xyz stock _____. a、rises; rises b、rises; falls c、falls; rises d、falls; falls
7、【单选题】if the expected return on u.s. treasury bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent, then the expected return of corporate bonds ______ relative to u.s. treasury bonds and the demand for corporate bonds _____. a、rises; rises b、rises; falls c、falls; rises d、falls; falls
8、【单选题】for a holding period of one year the expected return on a consol is _____ the higher is the price of the consol today, and _____ the higher is the price of the consol next year. a、higher; higher b、higher; lower c、lower; higher d、lower; lower
9、【单选题】holding the expected return on bonds constant, an increase in the expected return on common stocks would _____ the demand for bonds, shifting the demand curve to the _____. a、decrease; left b、decrease; right c、increase; left d、increase; right
10、【单选题】holding the expected return on bonds constant, a decrease in the expected return on stocks would _____ the demand for bonds, shifting the demand curve to the _____. a、decrease; left b、decrease; right c、increase; left d、increase; right
11、【单选题】as the price of a bond falls and the expected return _____, bonds become _____ attractive to investors. a、falls; less b、falls; more c、rises; less d、rises; more
12、【单选题】as the price of a bond _____ and the expected return _____, bonds become more attractive to investors and the quantity demanded rises. a、falls; rises b、falls; falls c、rises; rises d、rises; falls
13、【单选题】if interest rates are expected to rise in the future, the demand for long-term bonds _____ and the demand curve shifts to the _____. a、rises; right b、rises; left c、falls; right d、falls; left
14、【单选题】deflation causes the _____ bonds to increase, the _____ bonds to decrease, and _____ to increase. a、supply of; demand for; bond prices b、supply of; demand for; interest rates c、demand for; supply of; bond prices d、demand for; supply of; interest rates
15、【单选题】holding everything else equal, an increase in the money supply causes a、interest rates to decline initially. b、interest rates to increase initially. c、bond prices to decline initially. d、both (a) and (c) of the above.
16、【单选题】holding everything else equal, an increase in the money supply causes a、interest rates to decline initially. b、interest rates to increase initially. c、bond prices to increase initially. d、both (a) and (c) of the above.
3.1an economic analysis of financial structure
1、【单选题】the "lemons problem" exists because of a、transactions costs. b、economies of scale. c、rational expectations. d、asymmetric information.
2、【单选题】debt contracts a、are agreements by the borrowers to pay the lenders fixed dollar amounts at periodic intervals. b、have a higher cost of state verification than equity contracts. c、are used less frequently to raise capital than are equity contracts. d、never result in a loss for the lender.
3、【单选题】which of the following statements concerning external sources of financing for nonfinancial businesses in the united states are true? a、bonds are a far more important source of finance than are stocks. b、stocks and bonds, combined, supply more than one-half of the external funds. c、financial intermediaries such as banks are a relatively unimportant source of external funds. d、only (a) and (b) of the above.
4、【单选题】which of the following statements concerning external sources of financing for nonfinancial businesses in the united states are true? a、financial intermediaries such as banks are the most important source of external funds. b、bonds are a far more important source of finance than are stocks. c、stocks and bonds, combined, supply less than one-fifth of the external funds. d、only (a) and (b) of the above.
5、【单选题】a borrower who takes out a loan usually has better information about the potential returns and risk of the investment projects he plans to undertake than does the lender. this inequality of information is called a、moral hazard. b、asymmetric information. c、noncollateralized risk. d、adverse selection.
6、【单选题】if bad credit risks are the ones who most actively seek loans and, therefore, receive them from financial intermediaries, then financial intermediaries face the problem of a、moral hazard. b、adverse selection. c、free-riding. d、costly state verification.
7、【单选题】the problem created by asymmetric information before the transaction occurs is called _____, while the problem created after the transaction occurs is called _____. a、adverse selection; moral hazard b、moral hazard; adverse selection c、costly state verification; free-riding d、free-riding; costly state verification
8、【单选题】some of the problems that cause financial repression in developing and transition economies include a、poor legal systems. b、strong accounting standards. c、private ownership of banks. d、excessive government regulation.
9、【单选题】financial crises a、are major disruptions in financial markets that are characterized by sharp declines in asset prices and the failures of many financial and nonfinancial firms. b、occur when adverse selection and moral hazard problems in financial markets become more significant. c、frequently lead to sharp contractions in economic activity. d、all of the above.
10、【单选题】solutions to the moral hazard problem include a、high net worth. b、monitoring and enforcement of restrictive covenants. c、greater reliance on debt contracts and less on equity contracts. d、all of the above.
11、【单选题】one way of describing the solution that high net worth provides to the moral hazard problem is to say that it a、collateralizes the debt contract. b、makes the debt contract incentive compatible. c、state verifies the debt contract. d、does none of the above.
3.2banking and the management of financial institutions
1、【单选题】which of the following statements are true? a、a bank’s assets are its sources of funds. b、a bank’s liabilities are its uses of funds. c、a bank’s balance sheet shows that total assets equal total liabilities plus equity capital. d、each of the above.
2、【单选题】which of the following are reported as liabilities on a bank’s balance sheet? a、reserves b、small denomination time deposits c、loans d、deposits with other banks
3、【单选题】which of the following are reported as liabilities on a bank’s balance sheet? a、nontransaction deposits b、bank capital c、loans d、only (a) and (b) of the above
4、【单选题】which of the following are reported as liabilities on a bank’s balance sheet? a、discount loans b、cash items in the process of collection c、state government securities d、all of the above
5、【单选题】which of the following are reported as liabilities on a bank’s balance sheet? a、bank capital b、loans c、reserves d、all of the above
6、【单选题】the share of checkable deposits in total bank liabilities has a、expanded moderately over time. b、expanded dramatically over time. c、shrunk over time. d、remained virtually unchanged since 1960.
7、【单选题】which of the following are reported as assets on a bank’s balance sheet? a、u.s. treasury securities b、loans c、discount loans from the fed d、only (a) and (b) of the above
8、【单选题】which of the following are reported as assets on a bank’s balance sheet? a、discount loans from the fed b、loans c、borrowings d、only (a) and (b) of the above
9、【单选题】which of the following are reported as assets on a bank’s balance sheet? a、cash items in the process of collection b、loans c、borrowings d、only (a) and (b) of the above
10、【单选题】which of the following are reported as assets on a bank’s balance sheet? a、cash items in the process of collection b、checkable deposits c、borrowings d、bank capital
3.3banking industry: structure and competition
1、【单选题】a $5 million deposit outflow from a bank has the immediate effect of a、reducing deposits and reserves by $5 million. b、reducing deposits and loans by $5 million. c、reducing deposits and securities by $5 million. d、reducing reserves and increasing loans by $5 million.
2、【单选题】if, after a deposit outflow, a bank has a reserve deficiency of $3 million, it can meet its reserve requirements by a、reducing deposits by $3 million. b、increasing loans by $3 million. c、selling $3 million of securities. d、reducing its capital by $3 million
3、【单选题】rising interest-rate risk a、increased the cost of financial innovation. b、increased the demand for financial innovation. c、reduced the cost of financial innovation. d、reduced the demand for financial innovation.
4、【单选题】the most significant change in financial market conditions since 1970 has been the dramatic a、increase in new treasury issues. b、increase in new stock offerings. c、increase in the volatility of interest rate movements. d、decline in the number of institutional investors, such as pension and mutual funds, relative to individual investors.
4.1structure of central banks
1、【单选题】the functions of the regional federal reserve banks include a、“establishing” the discount rate. b、rationing discount loans to banks. c、clearing checks. d、all of the above.
4.2function of central banks
1、【单选题】federal reserve assets include a、government securities. b、bank reserves. c、currency in circulation. d、all of the above.
2、【单选题】both _____ and _____ are federal reserve assets. a、currency in circulation; discount loans b、currency in circulation; government securities c、government securities; discount loans d、government securities; bank reserves
3、【单选题】the monetary liabilities of the federal reserve include a、government securities and discount loans. b、currency in circulation and reserves. c、government securities and reserves. d、currency in circulation and discount loans.
4、【单选题】both _____ and _____ are monetary liabilities of the fed. a、government securities; discount loans b、currency in circulation; bank reserves c、government securities; bank reserves d、discount loans; bank securities
5.1multiple deposit creation and the money supply process
1、【单选题】the government agency that oversees the banking system and is responsible for the conduct of monetary policy in the united states is a、the federal reserve system. b、the united states treasury. c、the u.s. gold commission. d、the house of representatives.
2、【单选题】which of the following are depository institutions? a、commercial banks b、savings and loan associations c、mutual savings banks d、all of the above
3、【单选题】the four players in the money supply process include a、banks, depositors, borrowers, and the u.s. treasury. b、banks, depositors, the central bank, and the u.s. treasury. c、banks, depositors, the central bank, and borrowers. d、banks, borrowers, the central bank, and the u.s. treasury.
4、【单选题】the monetary base is the sum of a、federal reserve currency in circulation and treasury currency in circulation. b、vault cash, deposits at the fed, and federal reserve currency in circulation. c、the fed’s monetary liabilities and the u.s. treasury’s monetary liabilities. d、none of the above.
5、【单选题】the sum of currency in circulation and total reserves is called a、the nonborrowed base. b、the borrowed base. c、the monetary base. d、the money supply.
6、【单选题】reserves are equal to the sum of a、required reserves and excess reserves. b、required reserves and vault cash reserves. c、excess reserves and vault cash reserves. d、vault cash and total reserves.
7、【单选题】total reserves are the sum of _____ and _____. a、excess reserves; borrowed reserves. b、required reserves; currency in circulation c、vault cash; excess reserves d、excess reserves; required reserves
8、【单选题】excess reserves are equal to a、total reserves minus discount loans. b、vault cash plus deposits with federal reserve banks minus required reserves. c、vault cash minus required reserves. d、deposits with the fed minus vault cash plus required reserves.
9、【单选题】a decrease in government securities held by the fed leads to a、an increase in the monetary base. b、an increase in the money supply. c、a decline in the money supply. d、only (a) and (b) of the above.
10、【单选题】the interest rate the fed charges banks borrowing from the fed is the a、federal funds rate. b、treasury bill rate. c、discount rate. d、prime rate.
11、【单选题】an increase in discount loans by the fed leads to a、a decline in the monetary base. b、a decline in the money supply. c、an increase in the money supply. d、all of the above.
12、【单选题】when the federal reserve purchases a government bond in the open market, a、reserves in the banking system increase. b、reserves in the banking system decline. c、federal reserve liabilities remain unchanged. d、federal reserve liabilities decline.
13、【单选题】when the fed sells $100 worth of bonds to the first national bank, reserves in the banking system a、increase by $100. b、increase by more than $100. c、decrease by $100. d、decrease by more than $100.
14、【单选题】when the fed wants to increase the level of reserves of the banking system, it can a、buy government bonds from the general public. b、buy government bonds from banks. c、increase discount loans to banks. d、do any of the above.
15、【单选题】factors that add to the monetary base include a、a decrease in the fed’s holding of treasury securities. b、a decrease in the fed’s holding of discount loans. c、an increase in treasury deposits at the fed. d、an increase in the fed’s holding of foreign currency deposits.
16、【单选题】the first national bank of hometown has excess reserves of $150. assuming a required reserve ratio of 10%, the first national bank can lend a、$1500. b、$750. c、$150. d、$135.
17、【单选题】the formula for the simple deposit multiplier can be expressed as a、r = (1 r) t b、d = (1 r) r c、r = (1 r) t d、r = (1 r) d
18、【单选题】if the required reserve ratio is 10 percent, the simple deposit multiplier is a、5.0. b、2.5. c、100.0. d、10.0.
19、【单选题】in the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 20 percent implies that the fed a、sold $250 in government bonds. b、sold $100 in government bonds. c、sold $50 in government bonds. d、purchased $100 in government bonds.
20、【单选题】if the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the money supply is a、$8000. b、$1200. c、$1200.8. d、$8400.
21、【单选题】if the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the money multiplier is approximately a、2.5. b、1.67. c、2.0. d、0.601.
5.2determinants of the money supply
1、【单选题】when banks reduce their holdings of excess reserves a、the monetary base increases. b、the monetary base falls. c、the money supply increases. d、the money supply falls.
2、【单选题】the money multiplier is negatively related to a、high-powered money. b、the excess reserves ratio. c、discount borrowings from the fed. d、both (a) and (b) of the above.
3、【单选题】the relationship between discount loans, the nonborrowed monetary base, and the monetary base is a、mb =mbn – dl. b、dl = mbn – mb. c、dl = mb – mbn. d、mb= dl- mbn.
4、【单选题】for a given level of the monetary base, an increase in the currency ratio will mean a(n) _____ in the m2 money multiplier and a(n) _____ in the m2 money supply. a、increase; increase b、increase; decrease c、decrease; increase d、decrease; decrease
5、【单选题】other things equal, a decrease in the time deposit ratio will result in _____ in m1 and _____ in m2. a、an increase; an increase b、no change; an increase c、a decrease; a decrease d、no change; a decrease
5.3the demand for money
1、【单选题】if nominal gdp is $10 trillion, and the money supply is $2 trillion, velocity is a、20. b、10. c、5. d、.2.
2、【单选题】the velocity of money is defined as a、real gdp divided by the money supply. b、nominal gdp divided by the money supply. c、real gdp times the money supply. d、nominal gdp times the money supply.
3、【单选题】the equation of exchange is a、m p = v y. b、m v= p y. c、m y= v p. d、m v = p y.
4、【单选题】keynes’s hypothesized that the speculative component of money demand was primarily determined by the level of a、interest rates. b、velocity c、income. d、stock market prices.
5、【单选题】the speculative motive for holding money is closely tied to what function of money? a、store of wealth b、unit of account c、medium of exchange d、none of the above
6、【单选题】in the keynesian theory of liquidity preference, velocity is equal to a、my/p. b、vm/py. c、1/f(i,y). d、y/f(i,y).
7、【单选题】friedman’s assumption that money and goods are substitutes indicates that a、changes in the money supply have only indirect effects on aggregate spending. b、changes in the money supply may have a direct effect on aggregate spending. c、interest rates have no effect on money demand, implying the velocity is constant. d、both (b) and (c) of the above are true.
8、【单选题】although milton friedman does not hold that velocity is a constant, he does conclude that a、the money supply is the primary determinant of nominal income. b、changes in velocity will be highly predictable. c、changes in velocity are not predictable. d、both (a) and (b) of the above are correct.
9、【单选题】the _____ sensitive is the demand for money to interest rates, the _____ unpredictable velocity will be. a、more; more b、more; less c、less; more d、less; less
6.1tools for monetary policy
1、【单选题】the fed uses three policy tools to manipulate the money supply: open market operations, which affect the _____; changes in discount lending, which affect the _____ by influencing the quantity of discount loans; and changes in reserve requirements, which affect the _____. a、money multiplier; monetary base; monetary base b、monetary base; money multiplier; monetary base c、monetary base; monetary base; money multiplier d、money multiplier; money multiplier; monetary base
2、【单选题】the fed uses three policy tools to manipulate the money supply: _____, which affect reserves and the monetary base; changes in _____, which affect reserves and the monetary base by influencing the quantity of discount loans; and changes in _____, which affect the money multiplier. a、open market operations; discount lending; margin requirements b、open market operations; discount lending; reserve requirements c、discount lending; open market operations; margin requirements d、discount lending; open market operations; reserve requirements
3、【单选题】the interest rate charged on overnight loans of reserves between banks is the a、prime rate. b、discount rate. c、federal funds rate. d、treasury bill rate.
4、【单选题】the quantity of reserves demanded rises when the a、discount rate rises. b、discount rate falls. c、federal funds rate rises. d、federal funds rate falls.
5、【单选题】of the three policy tools that the fed can use to change the money supply, the one that does not affect the monetary base is a、open market operations. b、changes in the discount rate. c、changes in the federal funds rate. d、reserve requirements.
6、【单选题】in the market for reserves, when the federal funds interest rate is below the discount rate, the supply curve of reserves is a、vertical. b、horizontal. c、positively sloped. d、negatively sloped.
7、【单选题】in the market for reserves, an open market _____ shifts the supply curve to the _____, raising the federal funds interest rate. a、sale; left b、sale; right c、purchase; right d、purchase; left
8、【单选题】in the market for reserves, when the demand for federal funds intersects the reserve supply along the horizontal section, increasing the discount rate a、increases the federal funds rate. b、lowers the federal funds rate. c、has no effect on the federal funds rate. d、has an indeterminate effect of the federal funds rate.
9、【单选题】in the market for reserves, when the federal funds rate is 3%, raising the discount rate from 5% to 6% a、lowers the federal funds rate. b、raises the federal funds rate c、has no effect on the federal funds rate. d、has an indeterminate effect on the federal funds rate
10、【单选题】the federal reserve usually keeps the discount rate a、above the target federal funds rate b、equal to the target federal funds rate. c、below the target federal funds rate. d、equal to zero.
11、【单选题】in the market for reserves, an increase in the reserve requirement shifts the demand curve to the _____ and causes the federal funds interest rate to _____. a、left; fall b、right; fall c、right; rise d、left; rise
12、【单选题】in the market for reserves, an increase in the reserve requirement shifts the _____ curve to the _____ and causes the federal funds interest rate to rise. a、demand; left b、demand; right c、supply; right d、supply; left
13、【单选题】when good weather speeds the check-clearing process, float tends to _____ causing the fed to initiate defensive open market _____. a、decrease; sales b、decrease; purchases c、increase; sales d、increase; purchases
14、【单选题】the discount rate is a、the interest rate the fed charges on loans to banks. b、the price the fed pays for government securities. c、the interest rate that banks charge their most preferred customers. d、the price banks pay the fed for government securities.
15、【单选题】the fed is reluctant to use reserve requirements to control the money supply and interest rates because a、they have the potential to create lending problems for banks with high excess reserves. b、frequent changes in reserve requirements complicate liquidity management for banks. c、of their weak impact on the money supply. d、of only (a) and (b) of the above.
6.2what should central banks do? monetary policy goals, strategy, and tactics
1、【单选题】the objectives of the federal reserve in its conduct of monetary policy include a、economic growth. b、price stability. c、high employment. d、all of the above.
2、【单选题】high unemployment is undesirable because it a、results in a loss of output. b、always increases inflation. c、always increases interest rates. d、reduces the federal budget deficit.
3、【单选题】price stability is desirable because a、inflation creates uncertainty, making it difficult to plan for the future. b、everyone is better off when prices are stable. c、price stability increases the profitability of the fed. d、it guarantees full employment.
4、【单选题】inflation results in a、ease of planning for the future. b、ease of comparing prices over time. c、social harmony. d、difficulty interpreting relative price movements.
5、【单选题】which economic goals of monetary policy make planning for the future easier? a、price level stability b、interest rate stability c、exchange rate stability d、all of the above
6、【单选题】which of the following is not an operating target? a、nonborrowed reserves b、monetary base c、federal funds interest rate d、discount rate
7、【单选题】which of the following is a potential operating target for the central bank? a、the monetary base b、the m1 money supply c、nominal gnp d、the discount rate
8、【单选题】which of the following is a potential operating target for the central bank? a、nonborrowed reserves b、the federal funds rate c、the monetary base d、each of the above
6.3transmission mechanisms if monetary policy: the evidence
1、【单选题】evidence that examines whether one variable has an effect on another by simply a. looking directly at the relationship between the two variables is a、reduced-form evidence. b、organizational-model evidence. c、direct-model evidence.
2、【单选题】evidence that is based on a variable having its effect on another variable through channels rather than a direct effect is known as a、indirect-model evidence. b、organizational-model evidence. c、reduced-form evidence. d、structural-model evidence.
3、【单选题】on the evening news you hear of a scientific study that directly links premature births to cigarette smoking. this is an example of a、direct-model evidence. b、informed voter-model evidence. c、structural-model evidence. d、reduced-form evidence.
4、【单选题】the channels through which monetary policy affects economic activity are called the a、transmission mechanisms of monetary policy. b、flow mechanisms of monetary policy. c、distribution mechanisms of monetary policy. d、allocational mechanisms of monetary policy.
5、【单选题】a contractionary monetary policy raises the real interest rate, causing the domestic currency to ______, thereby ______ net exports. a、appreciate; raising b、appreciate; lowering c、depreciate; raising d、depreciate; lowering
6、【单选题】monetary policy may affect spending on new residential housing through a、an interest-rate channel. b、an asset price channel. c、both an interest-rate and asset price channel. d、none of the above.
7、【单选题】the best indicator of the stance of monetary policy is a、short-term nominal interest rates. b、the level of prices. c、real interest rates. d、all of the above.
6.4money and inflation
1、【单选题】the condition of a continually rising price level is defined as a、stagflation. b、stagnation. c、disinflation. d、inflation.