1-Which one of the following is? true?
A. Transaction deposits are counted in M2 but are not included in M1.
B. ?Traveler’s checks are not considered to be money because they are not valid unless signed.
C. Most of the U.S. currency in existence circulates outside U.S. borders.
D. Balances in money market deposit accounts are counted in M1 but are not included in M2.
2-The importance of international trade in the U.S. economy
A. has been decreasing and is expected to continue to decrease.
B. has been decreasing but is expected to start to increase.
C. has been increasing but is expected to decrease in the future.
D. has been increasing and is expected to continue to increase.
3-If people in the United States buy more of a foreign good when its price? falls, then
A. fixed exchange rates will make foreign exchange markets more efficient.
B. the demand curve for U.S. dollars will slope up.
C. the exchange rate will increase when there is inflation.
D. the supply curve for U.S. dollars will slope up.
4-U.S. paper currency is issued by the
A. largest commercial banks.
B. United States Mint.
D. Federal Reserve System.
5-An increase in the money supply will
A. decrease aggregate supply.
B. decrease aggregate demand.
C. increase aggregate supply.
D. increase aggregate demand.
6-According to? Keynes, the impact of a decrease in the money supply is a
A-higher interest rate and larger growth in real GDP.
B. lower interest rate and larger growth in real GDP.
c-lower interest rate and smaller growth in real GDP.
D. higher interest rate and smaller growth in real GDP.
7-Which of the following is an argument against free? trade?
A. Protecting domestic jobs
B. Protecting infant industries
C-Protecting against dumping
D. All of the above
8-The? infant-industry argument is often criticized because
A.it reduces labor productivity in the short term.
B.it reduces the employment rate.
C.it is difficult to determine which industry merits protection.
D.it reduces government revenues in the short term.
9-Which of the following is NOT a function of the? Fed?
A. Offering checking accounts to the U.S. public
B. Regulating the money supply in the economy
C. Acting as? government’s fiscal agent
D. Providing a system of check collection and clearing for depository institutions
10-In a fractional reserve banking? system,
A-banks are required to keep a fraction of deposits in bonds.
B. banks do not keep sufficient reserves on hand to cover 100 percent of their? depositors’ accounts.
C. banks are required to keep a fraction of all deposits on hand and send the rest to the Fed.
D. banks are required to keep all deposits on hand so that they can pay their depositors when they desire to withdraw funds.
11-The FDIC helps prevent
B. risky behavior on the part of bankers.
C. risky behavior on the part of depositors.
D. bank runs.
12-A statement of assets and liabilities of any business entity is called
a cash flow statement.
B.an income statement.
C. a balance sheet.
D. a statement of net worth.
13-Which of the following would NOT increase German exports to the United? States?
A. An appreciation of the U.S. dollar
B. An appreciation of the euro
C. An increase in German demand for U.S. exports
D.A depreciation of the euro
14-If the economy is operating below its full employment? level, the Fed can
A. increase aggregate supply by raising the price level.
B. increase aggregate demand by increasing the rate of growth of the money supply.
C. increase aggregate demand by selling bonds and raising interest rates.
D. increase aggregate demand by stimulating the demand for money.
15-The Fed is said to be the? “lender of last? resort” in that
A.it makes loans to individuals whom commercial banks do not believe are? credit-worthy.
B.it charges a higher interest rate to borrowers than does any other bank.
C.it functions as the? government’s bank only when commercial banks fail to do so.
D.it stands ready to lend to any depository institution that it has decided should not fail.
16-When households choose to hold money as a store of? value, rather than holding assets such as certificates of? deposit, stocks, and? bonds, ________ demand for money results.
17-At the Bretton Woods? conference, all currencies were given
A. a floating value.
B. a par value.
C. a fixed value.
D. a variable value.
18-Assume that U.S. producers can manufacture cookies at a lower opportunity cost than Mexican producers. If this is the? case,
A. Mexico would have the comparative advantage in all products compared to the United States.
B.it will not be possible for Mexico to have an comparative advantage in the production of any other products.
C. Mexico could still have the comparative advantage in cookie production.
D.it would still be possible for Mexico to have a comparative advantage in trade for some other products.
19-An example of a unilateral transfer is
A.SDR payments to world creditors.
B. a check received in payment for an import.
C.a gift to a relative who lives abroad.
D.gold payments to foreign companies.
20-If the United States looks more economically and politically stable relative to the rest of the? world, this will
A. stop all trading between the currencies of the United States and other countries.
B. decrease the demand for dollars.
C. have no effect on the demand for dollars.
D. increase the demand for dollars.
21-An increase in the value of a domestic currency in terms of other currencies is known as
A. a flexible exchange rate.
C. a discount rate.
D. a depreciation.
22-The? interest-rate-based monetary policy transmission mechanism argues that an increase in the money supply
A. has no effect on aggregate demand but reduces? long-run aggregate supply.
B. has no effect on aggregate demand but increases? short-run aggregate supply.
C. causes interest rates to? fall, which causes an increase in planned? investment, and an increase in aggregate demand.
D. causes the inflation rate to? decline, which causes an increase in household consumption spending and an increase in aggregate demand.
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