Which of the following institutions plays the role of an international lender of last resort? A) the World Bank B) the International Monetary Fund C) the European Monetary System D) the Federal Reserve System ANSWER B
Date: September 10th, 2020
What are the benefits of bankruptcy laws that enable lenders to seize the assets of firms that default on loan contracts? What will be an ideal response? ANSWER When borrowers are aware that default will lead to asset seizure, they will work harder to avoid default. When lenders know that borrowers will do all […]
Date: September 10th, 2020
The consumer’s lifetime budget constraint states that A) the present value of lifetime consumption must be equal to the present value of lifetime gross income. B) the present value of lifetime consumption must be equal to the present value of lifetime disposable income. C) the present value of lifetime consumption plus the present value of […]
Date: September 10th, 2020
The liquidity preference theory distinguishes between ________. A) nominal and real quantities B) money and financial assets C) buying goods and earning interest income D) all of the above E) none of the above ANSWER D
Date: September 10th, 2020
Employment tends to be A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP. ANSWER A
Date: September 10th, 2020
Applying neoclassical theory to the housing market, ________ cause a decrease in the desired stock of houses. A) higher expected household incomes B) higher rates of household formation C) increases in the expected relative price of housing D) tighter constraints on mortgage financing ANSWER D
Date: September 10th, 2020
The saving-investment analysis for large open economies is somewhat more complicated than the analysis for small open economies mainly because ________. A) there is more information to keep track of for larger economies B) there are more unknowns in larger economies C) a larger economy may actually affect the world economy D) all of the […]
Date: September 10th, 2020
The single most important contributor to China’s economic growth has been ________. A) government-directed credit to key economic sectors B) strong demand for China’s exports C) rapid improvements in worker productivity D) a substantial increase in the utilization of labor and capital inputs ANSWER D
Date: September 10th, 2020
In the monetary small open-economy model with a flexible exchange rate, an increase in the foreign price level has which impact on domestic money demand? A) It increases it. B) It decreases it. C) It has no impact. D) It depends. ANSWER A
Date: September 10th, 2020
Applying neoclassical theory to the housing market, the idea that “housing is a good investment” refers to ________. A) higher expected household income B) the inability to buy as much housing at a higher price C) an expected increase in the relative price of housing D) a decrease in the cost of building new houses […]
Date: September 10th, 2020
