If additional information is not used when forming an optimal forecast because it is not available at that time, then expectations are A) obviously formed irrationally. B) still considered to be formed rationally. C) formed adaptively. D) formed equivalently. ANSWER B
Date: September 10th, 2020
All of the following are examples of off-balance sheet activities that generate fee income for banks EXCEPT A) foreign exchange trades. B) guaranteeing debt securities. C) back-up lines of credit. D) selling negotiable CDs. ANSWER D
Date: September 10th, 2020
Economic variables that generally move in tandem with the overall phases of the business cycle are called: A) leading indicators. B) coincident indicators. C) lagging indicators. D) none of the above. ANSWER B
Date: September 10th, 2020
What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year? A) 5 percent B) 10 percent C) -5 percent D) 25 percent ANSWER D
Date: September 10th, 2020
Reducing risk through the purchase of assets whose returns do not always move together is A) diversification. B) intermediation. C) intervention. D) discounting. ANSWER A
Date: September 10th, 2020
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank has ________ million dollars in excess reserves. A) three B) nine C) ten […]
Date: September 10th, 2020
Explain how the value of marginal cost affects the values of average variable cost and average total cost and what this means for the relationship between the marginal cost curve and the average variable and total cost curves. What will be an ideal response? ANSWER So long as the value of marginal cost is […]
Date: September 10th, 2020
The percentage of deposits that banks must hold in reserve is the A) excess reserve ratio. B) required reserve ratio. C) total reserve ratio. D) currency ratio. ANSWER B
Date: September 10th, 2020
Suppose that there is a negative aggregate supply shock and the central bank commits to an inflation rate target. A) If the commitment is credible, the public’s expected inflation will remain unchanged. B) Credible policy produces better outcomes on both inflation and output in the short run. C) Policies that are not credible produce worse […]
Date: September 10th, 2020
Which of the following is the best example of a monopolistically competitive market? A) The wheat market. B) The electricity market. C) The restaurant market. D) The market for automobiles. ANSWER C
Date: September 10th, 2020
