Question 1

It has been observed that a change in monetary policy in the United States

Accepted Answer

A) impacts net exports. 
B) has little or no effect on foreign markets. 
C) leads to corresponding changes in other countries. 
D) has only short run influences. 
A) impacts net exports. 
B) has little or no effect on foreign markets. 
C) leads to corresponding changes in other countries. 
D) has only short run influences.

Question 2

Samia makes $8,000 a month. Samia spends $2,500 on rent and related household expenses, $500 on food, $200 on clothes, $500 on entertainment and $600 on transportation. She always keeps $200 for things like the car breaking down. $3,500 is invested in the stock market. Which of the following statements is TRUE?

Accepted Answer

A) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $3,500. 
B) The transactions demand for money is $4,300, the precautionary demand is $3,500 and the asset demand is $200. 
C) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $0. 
D) The transactions demand for money is $3,500, the precautionary demand is $200 and the asset demand is $4,300. 
A) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $3,500. 
B) The transactions demand for money is $4,300, the precautionary demand is $3,500 and the asset demand is $200. 
C) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $0. 
D) The transactions demand for money is $3,500, the precautionary demand is $200 and the asset demand is $4,300.

Question 3

An appreciation of the U.S. dollar

Accepted Answer

A) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports. 
B) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports. 
C) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports. 
D) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports. 
A) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports. 
B) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports. 
C) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports. 
D) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports.

Question 4

What effect does a contractionary monetary policy in the U.S. have on the foreign trade sector?

Accepted Answer

A) The lower value of the dollar will decrease exports and increase imports. 
B) The lower value of the dollar will decrease imports and increase exports. 
C) The higher value of the dollar will decrease exports and increase imports. 
D) The higher value of the dollar will decrease imports and increase exports. 
A) The lower value of the dollar will decrease exports and increase imports. 
B) The lower value of the dollar will decrease imports and increase exports. 
C) The higher value of the dollar will decrease exports and increase imports. 
D) The higher value of the dollar will decrease imports and increase exports.

Question 5

An appreciation of the U.S. dollar is most likely a result that

Accepted Answer

A) the Fed has pursued an expansionary monetary policy. 
B) U.S. interest rates have increased. 
C) U.S. bond prices have increased. 
D) more dollars are required to obtain foreign currencies. 
A) the Fed has pursued an expansionary monetary policy. 
B) U.S. interest rates have increased. 
C) U.S. bond prices have increased. 
D) more dollars are required to obtain foreign currencies.

Question 6

By saying that the equation of exchange is an accounting identity, we mean that

Accepted Answer

A) it is useful for accountants, but not for economists. 
B) it identifies the key national income accounts. 
C) it is always true. 
D) it explains the effect of questionable accounting practices on macroeconomic performance. 
A) it is useful for accountants, but not for economists. 
B) it identifies the key national income accounts. 
C) it is always true. 
D) it explains the effect of questionable accounting practices on macroeconomic performance.

Question 7

If the Fed has announced that it plans on increasing the interest rate it will

Accepted Answer

A) engage in expansionary open market operations, thereby decreasing the money supply. 
B) engage in expansionary open market operations, thereby increasing the money supply. 
C) engage in contractionary open market operations, thereby decreasing the money supply. 
D) engage in contractionary open market operations, thereby increasing the money supply. 
A) engage in expansionary open market operations, thereby decreasing the money supply. 
B) engage in expansionary open market operations, thereby increasing the money supply. 
C) engage in contractionary open market operations, thereby decreasing the money supply. 
D) engage in contractionary open market operations, thereby increasing the money supply.

Question 8

The amount of money that people wish to hold to use in transactions varies directly with

Accepted Answer

A) their planned near-term purchases. 
B) the money supply. 
C) the income tax rate. 
D) the interest rate. 
A) their planned near-term purchases. 
B) the money supply. 
C) the income tax rate. 
D) the interest rate.

Question 9

The net-export effect of contractionary monetary policy is a(n)

Accepted Answer

A) depreciation of the value of the dollar and the increase of U.S. net exports. 
B) depreciation of the value of the dollar and the decrease of U.S. net exports. 
C) appreciation of the value of the dollar and the increase of U.S. net exports. 
D) appreciation of the value of the dollar and the decrease of U.S. net exports. 
A) depreciation of the value of the dollar and the increase of U.S. net exports. 
B) depreciation of the value of the dollar and the decrease of U.S. net exports. 
C) appreciation of the value of the dollar and the increase of U.S. net exports. 
D) appreciation of the value of the dollar and the decrease of U.S. net exports.

Question 10

According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?

Accepted Answer

A) an estimated long-run real interest rate 
B) the current deviation of the actual inflation rate from the Fed's inflation objective 
C) the proportionate gap between actual real GDP and a measure of potential real GDP 
D) all of the above 
A) an estimated long-run real interest rate 
B) the current deviation of the actual inflation rate from the Fed's inflation objective 
C) the proportionate gap between actual real GDP and a measure of potential real GDP 
D) all of the above

Question 11

Suppose the Fed increases the money supply. As a result of this, people go out and spend more money on consumer goods, increasing aggregate spending. This is known as a(n)

Accepted Answer

A) direct effect of monetary policy. 
B) indirect effect of monetary policy. 
C) direct effect of fiscal policy. 
D) indirect effect of fiscal policy. 
A) direct effect of monetary policy. 
B) indirect effect of monetary policy. 
C) direct effect of fiscal policy. 
D) indirect effect of fiscal policy.

Question 12

The incentive of holding excess reserves is equal to

Accepted Answer

A) the discount rate. 
B) the federal funds rate. 
C) the interest rate earned on excess reserves. 
D) none of the above. 
A) the discount rate. 
B) the federal funds rate. 
C) the interest rate earned on excess reserves. 
D) none of the above.

Question 13

The velocity of money

Accepted Answer

A) is, according to the equation of exchange, equal to P/M. 
B) indicates the number of times per year a dollar is spent on final goods and services. 
C) is, according to the equation of exchange, equal to M/Y. 
D) indicates the speed with which the U.S. Treasury can mint new coins. 
A) is, according to the equation of exchange, equal to P/M. 
B) indicates the number of times per year a dollar is spent on final goods and services. 
C) is, according to the equation of exchange, equal to M/Y. 
D) indicates the speed with which the U.S. Treasury can mint new coins.

Question 14

The Fed would be pursuing a contractionary monetary policy if it was

Accepted Answer

A) lowering the differential between the discount rate and the federal funds rate. 
B) lowering the reserve requirement. 
C) selling dollars in foreign exchange markets. 
D) selling bonds in the open market. 
A) lowering the differential between the discount rate and the federal funds rate. 
B) lowering the reserve requirement. 
C) selling dollars in foreign exchange markets. 
D) selling bonds in the open market.

Question 15

An appreciation of the U.S. dollar occurs when

Accepted Answer

A) the international price of the dollar falls. 
B) the international price of the dollar rises. 
C) the U.S. demand for foreign currencies increases. 
D) the supply of dollars in international markets increases. 
A) the international price of the dollar falls. 
B) the international price of the dollar rises. 
C) the U.S. demand for foreign currencies increases. 
D) the supply of dollars in international markets increases.

Question 16

According to Keynes, the effect on planned real investment spending resulting from the interest-rate impact of an increase in the money supply

Accepted Answer

A) impacts the economy through the multiplier. 
B) impacts the economy by increasing the value of the U.S. dollar. 
C) impacts the economy by reducing the deficit. 
D) does not impact the economy. 
A) impacts the economy through the multiplier. 
B) impacts the economy by increasing the value of the U.S. dollar. 
C) impacts the economy by reducing the deficit. 
D) does not impact the economy.

Question 17

When the U.S. dollar appreciates

Accepted Answer

A) foreign residents demand more of U.S. goods, and U.S. residents desire to purchase more foreign goods. 
B) foreign residents demand more of U.S. goods, and U.S. residents desire to purchase fewer foreign goods. 
C) foreign residents demand fewer of U.S. goods, and U.S. residents desire to purchase more foreign goods. 
D) foreign residents demand fewer of U.S. goods, and U.S. residents desire to purchase fewer foreign goods. 
A) foreign residents demand more of U.S. goods, and U.S. residents desire to purchase more foreign goods. 
B) foreign residents demand more of U.S. goods, and U.S. residents desire to purchase fewer foreign goods. 
C) foreign residents demand fewer of U.S. goods, and U.S. residents desire to purchase more foreign goods. 
D) foreign residents demand fewer of U.S. goods, and U.S. residents desire to purchase fewer foreign goods.

Question 18

The formula of the equation of exchange is

Accepted Answer

A) MS = Y. 
B) MS = VPY. 
C) MSV = PY. 
D) MS/P = Y. 
A) MS = Y. 
B) MS = VPY. 
C) MSV = PY. 
D) MS/P = Y.

Question 19

The "indirect effect" of an increase in the money supply is to

Accepted Answer

A) increase aggregate demand as people try to spend their excess money balances. 
B) increase aggregate demand as interest rates fall and investment spending increases. 
C) increase aggregate supply as firms anticipate future profits. 
D) decrease the price level. 
A) increase aggregate demand as people try to spend their excess money balances. 
B) increase aggregate demand as interest rates fall and investment spending increases. 
C) increase aggregate supply as firms anticipate future profits. 
D) decrease the price level.

Question 20

In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is

Accepted Answer

A) fiscal policy. 
B) tax rates and the progressivity of the income-tax system. 
C) government spending and various transfer-payment programs. 
D) the difference between the discount rate and the federal funds rate. 
A) fiscal policy. 
B) tax rates and the progressivity of the income-tax system. 
C) government spending and various transfer-payment programs. 
D) the difference between the discount rate and the federal funds rate.

It has been observed that a change in monetary policy in the United States

An appreciation of the U.S. dollar

What effect does a contractionary monetary policy in the U.S. have on the foreign trade sector?

An appreciation of the U.S. dollar is most likely a result that

By saying that the equation of exchange is an accounting identity, we mean that

If the Fed has announced that it plans on increasing the interest rate it will

The amount of money that people wish to hold to use in transactions varies directly with

The net-export effect of contractionary monetary policy is a(n)

According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?

Suppose the Fed increases the money supply. As a result of this, people go out and spend more money on consumer goods, increasing aggregate spending. This is known as a(n)

The incentive of holding excess reserves is equal to

The velocity of money

The Fed would be pursuing a contractionary monetary policy if it was

An appreciation of the U.S. dollar occurs when

According to Keynes, the effect on planned real investment spending resulting from the interest-rate impact of an increase in the money supply

When the U.S. dollar appreciates

The formula of the equation of exchange is

The "indirect effect" of an increase in the money supply is to

In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 15: Domestic and International Dimensions of Monetary Policy

It has been observed that a change in monetary policy in the United States

An appreciation of the U.S. dollar

What effect does a contractionary monetary policy in the U.S. have on the foreign trade sector?

An appreciation of the U.S. dollar is most likely a result that

By saying that the equation of exchange is an accounting identity, we mean that

If the Fed has announced that it plans on increasing the interest rate it will

The amount of money that people wish to hold to use in transactions varies directly with

The net-export effect of contractionary monetary policy is a(n)

According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?

Suppose the Fed increases the money supply. As a result of this, people go out and spend more money on consumer goods, increasing aggregate spending. This is known as a(n)

The incentive of holding excess reserves is equal to

The velocity of money

The Fed would be pursuing a contractionary monetary policy if it was

An appreciation of the U.S. dollar occurs when

According to Keynes, the effect on planned real investment spending resulting from the interest-rate impact of an increase in the money supply

When the U.S. dollar appreciates

The formula of the equation of exchange is

The "indirect effect" of an increase in the money supply is to

In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters