Circulating private bank notes A) have never been used in the United States. B) were widely used in the Free Banking Era. C) were widely used in the United States during the Great Depression. D) are still currently in use in Canada. ANSWER B
Date: September 10th, 2020
Ricardian equivalence implies A) that when the government borrows more, the market real interest rate goes up. B) that if the government saves less, then the nation saves less. C) that when taxes are cut people consume more. D) that consumers will save their tax cuts to pay their future taxes. ANSWER D
Date: September 10th, 2020
A prominent aspect of the recent Great Recession, but not of the Great Depression of the 1930s, is ________. A) bank panics B) mortgage defaults C) an increase in the credit spread D) nonconventional monetary policy ANSWER D
Date: September 10th, 2020
In a two-period model, government spending is financed through A) taxes and transfer payments. B) taxes and issuing debt. C) taxes and redeeming debt. D) taxes only. ANSWER B
Date: September 10th, 2020
We consider the preferences of the consumer because A) we want to understand the consumer’s reaction to changing circumstances. B) we want to determine the best marketing strategy. C) the government wants to make the best consumption and leisure choice. D) the firm needs to determine what to produce. ANSWER A
Date: September 10th, 2020
In the New Keynesian open economy model, government spending A) is an effective stabilization tool with a flexible exchange rate, and an ineffective stabilization tool with a fixed exchange rate B) is an ineffective stabilization tool with a flexible exchange rate, and an effective stabilization tool with a fixed exchange rate; prices are flexible. C) […]
Date: September 10th, 2020
An increase in the general level of prices will tend to cause, other things the same ________. A) an increase in the real value of assets B) an increase in the real value of liabilities C) no change in the real value of liabilities D) a decrease in the real value of liabilities ANSWER […]
Date: September 10th, 2020
The government’s present value budget constraint states that A) taxes must equal government spending in each period. B) the present value of government spending must be equal to the present value of consumers’ disposable incomes. C) the present value of government spending must be equal to the present value of taxes. D) the government may […]
Date: September 10th, 2020
In the New Keynesian open economy model, if the exchange rate is fixed A) fiscal policy and monetary policy are powerless. B) fiscal policy is an effective stabilization tool. C) a change in current total factor productivity increases output. D) monetary policy is an effective stabilization tool. ANSWER B
Date: September 10th, 2020
Which of the following is true for the European Central Bank (ECB)? A) its executive board meets less often than the FOMC B) the members of its executive board have lifetime appointments C) it is a more decentralized system than the Federal Reserve D) all of the above E) none of the above ANSWER […]
Date: September 10th, 2020
