Recent research indicates that inflation performance (low inflation) has been found to be best in countries with A) the most independent central banks. B) political control of monetary policy. C) money financing of budget deficits. D) a policy of always keeping interest rates low. ANSWER A
Date: September 10th, 2020
In the one-period valuation model, the current stock price increases if A) the expected sales price increases. B) the expected sales price falls. C) the required return increases. D) dividends are cut. ANSWER A
Date: September 10th, 2020
U.S. Treasury bills pay no interest but are sold at a ________. That is, you will pay a lower purchase price than the amount you receive at maturity. A) premium B) collateral C) default D) discount ANSWER D
Date: September 10th, 2020
The Taylor Principle states that central banks raise nominal rates by ________ than any rise in expected inflation so that real interest rates ________ when there is a rise in inflation. A) less; rise B) more; fall C) less; fall D) more; rise ANSWER D
Date: September 10th, 2020
The purchase of a Boeing airplane by the U.S. government is considered part of government consumption expenditures and gross investment. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
The opportunity cost of holding excess reserves is the federal funds rate A) minus the discount rate. B) plus the discount rate. C) plus the interest rate paid on excess reserves. D) minus the interest rate paid on excess reserves. ANSWER D
Date: September 10th, 2020
An income tax system where higher tax rates are applied to increased amounts of income is called: A) a regressive tax system. B) a proportional tax system. C) a progressive tax system. D) a flat rate tax system. ANSWER C
Date: September 10th, 2020
In the one-period valuation model, an increase in the required return on investments in equity A) increases the expected sales price of a stock. B) increases the current price of a stock. C) reduces the expected sales price of a stock. D) reduces the current price of a stock. ANSWER D
Date: September 10th, 2020
In the one-period valuation model, the value of a share of stock today depends upon A) the present value of both the dividends and the expected sales price. B) only the present value of the future dividends. C) the actual value of the dividends and expected sales price received in one year. D) the future […]
Date: September 10th, 2020
Make the case for and against an independent Federal Reserve. What will be an ideal response? ANSWER Case for: 1. An independent Federal Reserve can shield the economy from the political business cycle, and it will be less likely to have an inflationary bias to monetary policy. 2. Control of the money supply is […]
Date: September 10th, 2020
