Question 1

What may be the reasons that explain the observation that during periods of hyperinflation economic growth actually slows or even contracts?

Accepted Answer

Periods of hyperinflation or highly unst

Question 2

The specific goals of central banks include all of the following except:

Accepted Answer

A) High stock prices 
B) Low and stable inflation 
C) High and stable real growth 
D) A stable exchange rate 
A) High stock prices 
B) Low and stable inflation 
C) High and stable real growth 
D) A stable exchange rate

Question 3

How do the specific goals of interest rate and exchange rate stability differ in importance from the other specific goals mentioned for central bankers?

Accepted Answer

As the text mentions, interest rate and

Question 4

Which of the following statements are true?

Accepted Answer

A) Printing money can be a profitable venture for a government 
B) Printing money, while necessary, is a losing venture for a government 
C) Too much money printed usually leads to lower prices 
D) In the modern economy the amount of money printed has no effect on prices 
A) Printing money can be a profitable venture for a government 
B) Printing money, while necessary, is a losing venture for a government 
C) Too much money printed usually leads to lower prices 
D) In the modern economy the amount of money printed has no effect on prices

Question 5

At a growth rate of 6% an economy will double in size in:

Accepted Answer

A) 7 years 
B) 14 years 
C) 12 years 
D) 6 years 
A) 7 years 
B) 14 years 
C) 12 years 
D) 6 years

Question 6

Central bank accountability means:

Accepted Answer

A) Politicians will establish set goals and central bankers will report on their progress 
B) Central bankers are not accountable to any elected officials 
C) Central bankers are only accountable to the banks in their respective countries 
D) Central bankers must hold press conferences to explain their monetary policy views 
A) Politicians will establish set goals and central bankers will report on their progress 
B) Central bankers are not accountable to any elected officials 
C) Central bankers are only accountable to the banks in their respective countries 
D) Central bankers must hold press conferences to explain their monetary policy views

Question 7

If governments operated like businesses, meaning their goal was to maximize profits, why would they likely never give up the power to print money to any other institution?

Accepted Answer

Printing money can be a very p

Question 8

There are a group of financial advisors and writers in the U.S.that are casually referred to as Fed Watchers or Fed Speculators.After studying Chapter 15, what do you think they do and why might people listen to them?

Accepted Answer

These individuals pay attention to many

Question 9

In its role as the bankers' bank, a central bank performs each of the following, except:

Accepted Answer

A) Providing loans during times of financial distress 
B) Providing deposit insurance 
C) Overseeing commercial banks and the financial system 
D) Managing the payments system 
A) Providing loans during times of financial distress 
B) Providing deposit insurance 
C) Overseeing commercial banks and the financial system 
D) Managing the payments system

Question 10

The rationale for the existence of central banks is mainly that:

Accepted Answer

A) Financial systems are inherently stable 
B) They are needed for the supervision of banks 
C) Financial intermediation cannot occur without a central bank 
D) Financial markets are prone to periods of extreme volatility 
A) Financial systems are inherently stable 
B) They are needed for the supervision of banks 
C) Financial intermediation cannot occur without a central bank 
D) Financial markets are prone to periods of extreme volatility

Question 11

The Federal Reserve didn't always communicate its actions to the public like it does today.As recently as the mid 1990s, secrecy ruled.Why do you think the Fed and most central banks now are more public about their actions and the reasons for them?

Accepted Answer

In principles of economics we learn that

Question 12

Central banks are in a position to control risk in the economy because they:

Accepted Answer

A) Control the unemployment rate 
B) Control the economy's real growth rate 
C) Control short-term interest rates 
D) Can change taxes 
A) Control the unemployment rate 
B) Control the economy's real growth rate 
C) Control short-term interest rates 
D) Can change taxes

Question 13

History has shown us central banks:

Accepted Answer

A) Have always prevented financial crisis 
B) Seldom minimize a financial crisis 
C) Sometimes can make a financial crisis worse 
D) Are independent from most financial crisis 
A) Have always prevented financial crisis 
B) Seldom minimize a financial crisis 
C) Sometimes can make a financial crisis worse 
D) Are independent from most financial crisis

Question 14

The central bank in the United States is:

Accepted Answer

A) The Bank of America 
B) The Federal Reserve 
C) The U.S.Treasury 
D) The Bank of the United States 
A) The Bank of America 
B) The Federal Reserve 
C) The U.S.Treasury 
D) The Bank of the United States

Question 15

Potential output depends on all of the following except:

Accepted Answer

A) Technology 
B) The number of firms in the economy 
C) The size of the capital stock 
D) The number of people who can work 
A) Technology 
B) The number of firms in the economy 
C) The size of the capital stock 
D) The number of people who can work

Question 16

Most central banks of industrialized countries have monetary policy formed by:

Accepted Answer

A) An individual, usually the minister of finance 
B) Their version of Congress 
C) A committee made up of members of their central bank 
D) An individual, usually the person heading the central bank at the time 
A) An individual, usually the minister of finance 
B) Their version of Congress 
C) A committee made up of members of their central bank 
D) An individual, usually the person heading the central bank at the time

Question 17

One argument for an independent central bank is:

Accepted Answer

A) Successful monetary policy requires a long time horizon usually well beyond the next election of most public officials 
B) Without independence competent people would not take a position in a central bank 
C) The central bank usually hires more competent individuals than the Treasury department or other finance ministries 
D) Central bankers have a short-run focus that usually corrects problems faster 
A) Successful monetary policy requires a long time horizon usually well beyond the next election of most public officials 
B) Without independence competent people would not take a position in a central bank 
C) The central bank usually hires more competent individuals than the Treasury department or other finance ministries 
D) Central bankers have a short-run focus that usually corrects problems faster

Question 18

Which of the following statements is most true concerning economic policy in the U.S.?

Accepted Answer

A) Monetary policymakers tend to have a long view while fiscal policymakers tend to ignore the long-run inflationary ramifications of their actions 
B) Fiscal policymakers tend to focus on inflation and unemployment while monetary policymakers focus most of their attention on the money supply and the exchange rate 
C) Fiscal policymakers tend to focus more on pleasing their constituents and so are willing to sacrifice the short run for the long run 
D) Monetary policy is not independent of fiscal policy because Congress ultimately oversees both 
A) Monetary policymakers tend to have a long view while fiscal policymakers tend to ignore the long-run inflationary ramifications of their actions 
B) Fiscal policymakers tend to focus on inflation and unemployment while monetary policymakers focus most of their attention on the money supply and the exchange rate 
C) Fiscal policymakers tend to focus more on pleasing their constituents and so are willing to sacrifice the short run for the long run 
D) Monetary policy is not independent of fiscal policy because Congress ultimately oversees both

Question 19

The Federal Reserve's policy regarding announcing its policy decisions has:

Accepted Answer

A) Always been to announce it immediately; that was part of the original Federal Reserve Act of 1913 
B) Only recently gone to immediate announcement; until 1994 these policy decisions were secret 
C) Been to release the decisions immediately since its early failure at preventing the Great Depression 
D) Changed so that now the Fed does not release its decisions publicly 
A) Always been to announce it immediately; that was part of the original Federal Reserve Act of 1913 
B) Only recently gone to immediate announcement; until 1994 these policy decisions were secret 
C) Been to release the decisions immediately since its early failure at preventing the Great Depression 
D) Changed so that now the Fed does not release its decisions publicly

Question 20

The monetary policy framework is:

Accepted Answer

A) The Law that created the Federal Reserve System 
B) The idea that central banks should be interconnected across countries 
C) The concept that central bankers should be independent, accountable, and good communicators 
D) A growing belief that there should be one central bank headquartered at the World Bank 
A) The Law that created the Federal Reserve System 
B) The idea that central banks should be interconnected across countries 
C) The concept that central bankers should be independent, accountable, and good communicators 
D) A growing belief that there should be one central bank headquartered at the World Bank

Exam 15: Central Banks in the World Today

What may be the reasons that explain the observation that during periods of hyperinflation economic growth actually slows or even contracts?

The specific goals of central banks include all of the following except:

How do the specific goals of interest rate and exchange rate stability differ in importance from the other specific goals mentioned for central bankers?

Which of the following statements are true?

At a growth rate of 6% an economy will double in size in:

Central bank accountability means:

If governments operated like businesses, meaning their goal was to maximize profits, why would they likely never give up the power to print money to any other institution?

There are a group of financial advisors and writers in the U.S.that are casually referred to as Fed Watchers or Fed Speculators.After studying Chapter 15, what do you think they do and why might people listen to them?

In its role as the bankers' bank, a central bank performs each of the following, except:

The rationale for the existence of central banks is mainly that:

The Federal Reserve didn't always communicate its actions to the public like it does today.As recently as the mid 1990s, secrecy ruled.Why do you think the Fed and most central banks now are more public about their actions and the reasons for them?

Central banks are in a position to control risk in the economy because they:

History has shown us central banks:

The central bank in the United States is:

Potential output depends on all of the following except:

Most central banks of industrialized countries have monetary policy formed by:

One argument for an independent central bank is:

Which of the following statements is most true concerning economic policy in the U.S.?

The Federal Reserve's policy regarding announcing its policy decisions has:

The monetary policy framework is:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value, and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets, and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Financial Industry Structure

Regulating the Financial System

The Structure of Central Banks: the Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Monetary Policy: Stabilizing the Domestic Economy

Exchange-Rate Policy and the Central Bank

Money Growth, Money Demand, and Modern Monetary Policy

Output, Inflation, and Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

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