Macroeconomics 201 Final Exam - HomeworkMarket.com

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Oct 28, 2013 (3 years and 11 months ago)

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Macroeconomics 201


Answer all 25 multiple choice questions.


1. Which is
not
a function of money?



a) unit of account
; b) medium of exchange; c) means of measure;
d) store of value


2.
Since the 1980s, it has generally been the view that the money su
pply:


a)

is completely controlled by the central bank;

b)

cannot be controlled by the central bank;

c)


is completely controlled by the Treasury;

d)

cannot be controlled by the Treasury


3) Which of the following is
not

one of the three kinds of demand for money in
Keynes?



a) speculative
;

b) precautionary
;
c) administrative
;

d) transactions


4) W
hich of the following is
not
one of the ways the Fed can use to try to affect the
money supply?


a) change the discount rate
;

b
) change the fed funds rate;

c) change the r
eserve requirement ratio
;

d) open market operations


5)
Expansionary policy is used to:


a)

try to fight inflation;

b)

try to decrease output, income, and employment;

c)

try to increase output, income, and employment;

d)

try to increase deflation


6) T
here is a tensio
n between these two characteristics of
banks in
a fractional reserve
banking system
:


a)
private profit seeking enterprises and susceptible to runs
;

b) private profit seeking enterprises and engage in money creation
;

c) engage in money creation and suscept
ible to runs
;

d) engage in runs and susceptible to money creation


7) T
he liquidity trap is:


a) the horizontal portion of the money demand function
;

b) when interest rates are so low people do not think they can go any lower
;

c)
when interest rates are i
nsensitive to changes in the Money supply
;

d) all of the above


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8) T
he limits to KEMP are:


a) I may be insensitive to changes in i
,

i may insensitive to changes in Ms, Y may
be
insensitive to changes in I;

b) I may be insensitive to changes in Y, I may be
insensitive to changes in i, i may b
e
insensitive to changes in Ms;

c) I may be insensitive to changes in i, i may be insensitive to changes in Ms, Y may be
insensitive to changes in
i
;

d) I may be insensitive to changes in i;
Ms

may be insensitive
to chan
ges in i
, Y may be
insensitive to changes in I


9) T
he limits to KAIMP are
:


a) only works for demand
-
pull inflation, Fed may overshoot
its mark and cause a
recession;

b) only works for cost
-
push inflation, Fed may overshoot its mark and cause a recession;

c) only works for demand
-
push inflation, Fed may overshoot
its mark and cause a
recession;

d) only works for cost
-
pull inflation, Fed may undershoot its mark and cause a recession


10) I
n the endogenous view of the money supply
:


a) the M
s curve is vertic
al
;


b)
the Ms cur
ve is horizontal;

c) the Md

curve is vertical
;

d)

the Md curve is horizontal


11)

Deficit Hawks view deficits as causing
:


a) high investment rates; b) deflation; c) high interest rates; d) all of the above


12) Deficit Doves believe

th
at:


a) defi
cits cause high interest rates;

b) high interest rates cause

bigger deficits;

c)
deficits are always good;

d) all of the above


13) In the functional finance view, bond sales:


a) finance deficit spending;

b) add to bank reserves depleted by de
ficit spending;

c) drain excess reserves to main
tain short term interest rates;

d) none of the above


14) In the functional finance view, taxes:


a) finance government spending;

b) create a demand for government bonds;

c) create a demand for government cu
rrency;

d) all of the above





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15) In the functional finance view:


a) the government nee
ds the public’s money to spend;

b) the public needs the government

to accept its money
;

c)
the government needs t
he public to need its currency;

d) both b and c


16)
The view that the national debt is a burden on future generations is held by:


a) deficit hawks; b) deficits doves; c) functional finance; d) a and b


17) The view that the government is the monopoly issuer of the currency is held by:


a) deficit hawks; b)

deficit doves; c) functional finance; d) b and c


18) Which describes KEMP:


a) Ms



i↑


I↑


Y↑;

b) Ms↑


i↓



I ↓
--

Y↑;

c) Ms↑


i↓


I↑


Y↑;

d) Ms↑


i↓

I↑


P↓


19) In the endogenous money view:


a) deposits create l
oans;

b) reserves create loans;

c) loans create deposits;

d) deposits create reserves


20)
The most common method
the Fed uses to try to affect the money supply is:


a) reserve requirement ratio; b) discount rate; c) open market operations; d) fed funds rate


21)
What are the tools of monetary policy?


a)
government spending and taxes
;

b)

money supply and interest ra
tes
;

c)
money demand and interest rates
;

d)
government supply and tax rates


22) In the endogenous view of the money supply, everything begins with:


a) the supply of cr
edit;


b) the demand for credit;

c
) the supply of loanable funds;

d) none of the abov
e








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23)
The Fed can try to increase the money supply by
:


a)
selling discount rates
;


b)
buying discount rates
;


c)
selling bonds
;


d)
buying bonds



24)
The Fed can try to decrease the money supply by
:


a)
raising the discount rate
;

b)
lowering the di
scount rate
;

c)
lowering the reserve requirement ratio
;

d)
raising the money supply



25)
When money is used to settle debt it is functioning as:


a) a means of purchase;

b) a means of value;

c) a means of payment;

d) a medium of account