Question 1

Which of the following items are not counted in U.S.GDP?

Accepted Answer

A) your purchase of a new Ford Mustang 
B) your purchase of new tires for your old car 
C) GM's purchase of tires for new cars 
D) a foreign consumer's purchase of a new Ford Mustang 
A) your purchase of a new Ford Mustang 
B) your purchase of new tires for your old car 
C) GM's purchase of tires for new cars 
D) a foreign consumer's purchase of a new Ford Mustang C

Question 2

Evidence from the United States and other foreign countries indicates that

Accepted Answer

A) there is a strong positive association between inflation and growth rate of money over long periods of time. 
B) there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon." 
C) countries with low monetary growth rates tend to experience higher rates of inflation,all else being constant. 
D) money growth is clearly unrelated to inflation. 
A) there is a strong positive association between inflation and growth rate of money over long periods of time. 
B) there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon." 
C) countries with low monetary growth rates tend to experience higher rates of inflation,all else being constant. 
D) money growth is clearly unrelated to inflation. A

Question 3

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Accepted Answer

A) πt = (Pt - Pt - 1)/ Pt - 1. 
B) πt = (Pt + 1 - Pt - 1)/Pt - 1. 
C) πt = (Pt + 1 - Pt)/Pt. 
D) πt = (Pt - Pt - 1)/Pt. 
A) πt = (Pt - Pt - 1)/ Pt - 1. 
B) πt = (Pt + 1 - Pt - 1)/Pt - 1. 
C) πt = (Pt + 1 - Pt)/Pt. 
D) πt = (Pt - Pt - 1)/Pt. A

Question 4

Everything else constant,a stronger dollar will mean that

Accepted Answer

A) vacationing in England becomes more expensive. 
B) vacationing in England becomes less expensive. 
C) French cheese becomes more expensive. 
D) Japanese cars become more expensive. 
A) vacationing in England becomes more expensive. 
B) vacationing in England becomes less expensive. 
C) French cheese becomes more expensive. 
D) Japanese cars become more expensive.

Question 5

Evidence from business cycle fluctuations in the United States indicates that

Accepted Answer

A) a negative relationship between money growth and general economic activity exists. 
B) recessions are usually preceded by declines in bond prices. 
C) recessions are usually preceded by dollar depreciation. 
D) recessions are usually preceded by a decline in the growth rate of money. 
A) a negative relationship between money growth and general economic activity exists. 
B) recessions are usually preceded by declines in bond prices. 
C) recessions are usually preceded by dollar depreciation. 
D) recessions are usually preceded by a decline in the growth rate of money.

Question 6

If your nominal income in 2002 was $50,000,and prices doubled between 2002 and 2011,to have the same real income,your nominal income in 2011 must be

Accepted Answer

A) $50,000. 
B) $75,000. 
C) $90,000. 
D) $100,000. 
A) $50,000. 
B) $75,000. 
C) $90,000. 
D) $100,000.

Question 7

Poorly performing financial markets can be the cause of

Accepted Answer

A) wealth. 
B) poverty. 
C) financial stability. 
D) financial expansion. 
A) wealth. 
B) poverty. 
C) financial stability. 
D) financial expansion.

Question 8

A rising stock market index due to higher share prices

Accepted Answer

A) increases people's wealth,but is unlikely to increase their willingness to spend. 
B) increases people's wealth and as a result may increase their willingness to spend. 
C) decreases the amount of funds that business firms can raise by selling newly-issued stock. 
D) decreases people's wealth,but is unlikely to increase their willingness to spend. 
A) increases people's wealth,but is unlikely to increase their willingness to spend. 
B) increases people's wealth and as a result may increase their willingness to spend. 
C) decreases the amount of funds that business firms can raise by selling newly-issued stock. 
D) decreases people's wealth,but is unlikely to increase their willingness to spend.

Question 9

Prior to almost all recessions since 1900,there has been a drop in

Accepted Answer

A) inflation. 
B) the money stock. 
C) the growth rate of the money stock. 
D) interest rates. 
A) inflation. 
B) the money stock. 
C) the growth rate of the money stock. 
D) interest rates.

Question 10

What crucial role do financial intermediaries perform in an economy?

Accepted Answer

Financial intermediaries borro

Question 11

Financial markets promote greater economic efficiency by channeling funds from ________ to ________.

Accepted Answer

A) investors; savers 
B) borrowers; savers 
C) savers; borrowers 
D) savers; lenders 
A) investors; savers 
B) borrowers; savers 
C) savers; borrowers 
D) savers; lenders

Question 12

Why is it important to understand the bond market?

Accepted Answer

The bond market supports econo

Question 13

Everything else held constant,a weaker dollar will likely hurt

Accepted Answer

A) textile exporters in South Carolina. 
B) wheat farmers in Montana that sell domestically. 
C) automobile manufacturers in Michigan that use domestically produced inputs. 
D) furniture importers in California. 
A) textile exporters in South Carolina. 
B) wheat farmers in Montana that sell domestically. 
C) automobile manufacturers in Michigan that use domestically produced inputs. 
D) furniture importers in California.

Question 14

From 1980-1985,the dollar strengthened in value against other currencies.Who was helped and who was hurt by this strong dollar?

Accepted Answer

American consumers benefitted because im

Question 15

From 1980 to 1985 the dollar appreciated relative to the British pound.Holding everything else constant,one would expect that,when compared to 1980,

Accepted Answer

A) fewer Britons traveled to the United States in 1985. 
B) Britons imported more wine from California in 1985. 
C) Americans exported more wheat to England in 1985. 
D) more Britons traveled to the United States in 1985. 
A) fewer Britons traveled to the United States in 1985. 
B) Britons imported more wine from California in 1985. 
C) Americans exported more wheat to England in 1985. 
D) more Britons traveled to the United States in 1985.

Question 16

Which of the following is not a financial institution?

Accepted Answer

A) a life insurance company 
B) a pension fund 
C) a credit union 
D) a business college 
A) a life insurance company 
B) a pension fund 
C) a credit union 
D) a business college

Question 17

Complete Milton Friedman's famous statement,"Inflation is always and everywhere a ________ phenomenon."

Accepted Answer

A) recessionary 
B) discretionary 
C) repressionary 
D) monetary 
A) recessionary 
B) discretionary 
C) repressionary 
D) monetary

Question 18

The financial intermediaries that the average person interacts with most frequently are

Accepted Answer

A) exchanges. 
B) over-the-counter markets. 
C) finance companies. 
D) banks. 
A) exchanges. 
B) over-the-counter markets. 
C) finance companies. 
D) banks.

Question 19

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Accepted Answer

A) commodity markets. 
B) fund-available markets. 
C) derivative exchange markets. 
D) financial markets. 
A) commodity markets. 
B) fund-available markets. 
C) derivative exchange markets. 
D) financial markets.

Question 20

Banks are important to the study of money and the economy because they

Accepted Answer

A) channel funds from investors to savers. 
B) have been a source of rapid financial innovation. 
C) are the only important financial institution in the U.S.economy. 
D) create inflation. 
A) channel funds from investors to savers. 
B) have been a source of rapid financial innovation. 
C) are the only important financial institution in the U.S.economy. 
D) create inflation.

Exam 1: Why Study Money, banking, and Financial Markets

Which of the following items are not counted in U.S.GDP?

Evidence from the United States and other foreign countries indicates that

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Everything else constant,a stronger dollar will mean that

Evidence from business cycle fluctuations in the United States indicates that

If your nominal income in 2002 was $50,000,and prices doubled between 2002 and 2011,to have the same real income,your nominal income in 2011 must be

Poorly performing financial markets can be the cause of

A rising stock market index due to higher share prices

Prior to almost all recessions since 1900,there has been a drop in

What crucial role do financial intermediaries perform in an economy?

Financial markets promote greater economic efficiency by channeling funds from ________ to ________.

Why is it important to understand the bond market?

Everything else held constant,a weaker dollar will likely hurt

From 1980-1985,the dollar strengthened in value against other currencies.Who was helped and who was hurt by this strong dollar?

From 1980 to 1985 the dollar appreciated relative to the British pound.Holding everything else constant,one would expect that,when compared to 1980,

Which of the following is not a financial institution?

Complete Milton Friedman's famous statement,"Inflation is always and everywhere a ________ phenomenon."

The financial intermediaries that the average person interacts with most frequently are

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Banks are important to the study of money and the economy because they

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Financial markets promote greater economic efficiency by channeling funds from to .