Topics: Monetary policy, Economics, Macroeconomics Pages: 5 (869 words) Published: October 20, 2014
Week 5 quiz

1. In the U.S. current account, most of the trade deficit results from an excess of imported B. merchandise

2. What is the difference between the balance of trade and the balance of payments? A. The balance of trade is only part of the balance of trade.

3. If a government has implemented significantly higher trade tariffs, but does not want this action to affect the value of its currency, it will B. buy foreign currency because the tariffs will tend to make the domestic currency appreciate

4. During 2007, the United States and Japan announced possible limits on Chinese imports through higher tariff rates on Chinese products. To avoid these limits, China would have to D. increase the value of the yuan and decrease its trade surplus

5. If a country wants to prevent its exchange rate from falling, it could B. place restrictions on imports

6. All other things being equal, an increase in trade restrictions on imports wil A. reduce the demand for foreign currency, causing it to appreciate

Week 4 quiz

1. In the long-run framework, budget surpluses
c. are better than budget deficits over the long-run because unlike budget deficits, they increase savings and investment

2. The budget deficit or surplus is
c. difficult to measure and can be defined legitimately in several ways

3. Deficits and surpluses are best viewed as
B. a summary measure of a nation's fiscal policy

4. Suppose the government increases spending by $30 billion and raises taxes at by $20 billion at the same time. Then, B. interest rates will most likely increase

5. Because automatic stabilizers lower transfer payments and raise tax receipts as an economy recovers from a recession, they A. slow down the pace of an economic recovery

6. Most of the government budget is mandatory spending through programs like Medicare and Social Security, and much of the rest is politically difficult to alter. Because of this, C. the amount of spending is unlikely to be implemented as economists suggest

Week 3 quiz

1. If you expect interest rates to rise, you will want to be holding A. more money because prices will likely fall

2. The interest rate is the price paid for the use of a
D. financial asset
3. Which of the following do policy makers tend to target when setting monetary policy? B. Interest rates

4. If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent, this policy would most likely A. Increase both the money multiplier and the money supply

5. If banks hold excess reserves whereas before they did not, the money multiplier B. will become smaller

6. The process of money multiplier depends on
B. the banks holding all the currency

7. Quantitative easing refers to
D. non-standard monetary policy design to extend credit in the economy

8. If the Fed wants an easier monetary policy, it might
D. buy government securities to reduce the federal funds rate

9. When the Fed raised the interest rates between 2004 and 2007, the Federal Reserve B. sold U.S. government securities, thereby contracting funds to the federal funds market


1. The globalized AS/AD curve is the standard AS/AD model with an added C. world supply curve

2. According to Say's Law, people
A. supply goods in order to obtain other good

3. A shift in the long-run aggregate supply curve will change C. both output and the price level

4. The hypothesis about the macroeconomy that sees the recent problems with the U.S. economy directly related to the structural problems caused by globalization is referred to as the __________ hypothesis. C. structural stagnation

5. The central difference between the standard theory and the structural stagnation hypothesis when it comes to growth is C. the federal funds rate

6. In 2009, the personal savings rate rose. If the additional savings were not translated into investment, Keynes would predict that...
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