The Obama administration increased the tax on the top income tax bracket from 35% to 39%. Supply and demand analysis predicts the impact of this change was a ________ interest rate on municipal bonds and a ________ interest rate on Treasury bonds, all else the same. A) higher; lower B) lower; lower C) higher; higher […]
An increase in the reserve requirement would: A) decrease excess reserves and reflect an expansionary monetary policy. B) decrease excess reserves and reflect a contractionary monetary policy. C) increase excess reserves and reflect an expansionary monetary policy. D) increase excess reserves and reflect a contractionary monetary policy. ANSWER B
GDP measured with constant prices is referred to as A) real GDP. B) nominal GDP. C) the GDP deflator. D) industrial production. ANSWER A
The legislation that made all depository institutions regardless of Federal Reserve membership subject to the reserve requirements established by the Fed is called the: A) Glass-Steagall Act. B) McFadden Act. C) Monetary Control Act of 1980. D) none of the above ANSWER C
A decrease in the reserve requirement would: A) decrease excess reserves and reflect an expansionary monetary policy. B) decrease excess reserves and reflect a contractionary monetary policy. C) increase excess reserves and reflect an expansionary monetary policy. D) increase excess reserves and reflect a contractionary monetary policy. ANSWER C
Introduction of checks into the payments system reduced the costs of exchanging goods and services. Another advantage of checks is that A) they provide convenient receipts for purchases. B) they can never be stolen. C) they are more widely accepted than currency. D) the funds from a deposited check are available for use immediately. […]
Compared to an electronic payments system, a payments system based on checks has the major drawback that A) checks are less costly to process. B) checks take longer to process, meaning that it may take several days before the depositor can get her cash. C) fraud may be more difficult to commit when paper receipts […]
Secondary reserves are so called because A) they can be converted into cash with low transactions costs. B) they are not easily converted into cash, and are, therefore, of secondary importance to banking firms. C) 50% of these assets count toward meeting required reserves. D) they rank second to bank vault cash in importance of […]
Three factors explain the risk structure of interest rates A) liquidity, default risk, and the income tax treatment of a security. B) maturity, default risk, and the income tax treatment of a security. C) maturity, liquidity, and the income tax treatment of a security. D) maturity, default risk, and the liquidity of a security. […]
As the level of competition in an industry increases, the price-cost margin approaches: A) 0. B) 1. C) 10. D) infinity. ANSWER A
