The financial market events of September and October 2008 ________. A) sparked a sharp widening of the credit spread B) signalled the success of the policy response to the financial crisis C) reduced some of the uncertainty that had paralyzed financial markets D) resulted from the federal funds rate having fallen below zero ANSWER […]
The marginal rate of substitution measures A) the willingness of a consumer to exchange a good with another consumer. B) the willingness of a consumer to pay the form for a good. C) the value in dollars of the last unit of good obtained by the consumer. D) the rate at which a consumer is […]
If an increase in the growth rate of the money supply results in an equal increase in the rate of inflation with no effect on any real variables, we say that A) the classical dichotomy fails. B) money is neutral. C) money is superneutral. D) money is the most preferred store of value. ANSWER […]
In the monetary intertemporal model, the long-run effects of an increase in the growth rate of money include A) an increase in output and an increase in the real wage. B) an increase in output and a decrease in the real wage. C) a decrease in output and an increase in the real wage. D) […]
The velocity of money ________. A) represents the average number of times a dollar turns over through the year B) provides the link between the money supply and nominal income C) times the money supply should equal total income, according to the equation of exchange D) all of the above E) none of the above […]
On the modern Phillips curve, the initial impact of government policies to stimulate the economy is shown by ________. A) an upward movement along the Phillips curve to a higher inflation rate B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate C) a downward shift of the […]
A default premium is the interest rate premium A) under normal market circumstances. B) when there are no market fluctuations. C) covering the default risk. D) for government debt. ANSWER C
On the modern Phillips curve, the initial impact of productivity improvements that lower the costs of production is shown by ________. A) an upward movement along the Phillips curve to a higher inflation rate B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate C) a downward shift […]
A $100 million loan with a haircut of four percent requires collateral valued at ________. A) $104 million B) $96 million C) $4 million D) $400,000 ANSWER A
The real return of money is A) 0. B) -r. C) -R. D) -i. ANSWER D
