If government cuts taxes ________. A) national saving goes up B) the equilibrium interest rate would decrease C) discretionary income goes up D) all of the above E) none of the above ANSWER C
Date: September 10th, 2020
Consider the two graphs above. Suppose that financial liberalization enables more businesses to access credit markets. This would ________ the desired level of the capital stock, as depicted in graph ________. A) increase; B B) increase; A C) decrease; B D) decrease; A ANSWER A
Date: September 10th, 2020
Autonomous easing of monetary policy involves ________. A) raising interest rates and shifting the MP curve to the right B) lowering interest rates and shifting the MP curve to the left C) raising interest rates and shifting the MP curve to the left D) lowering interest rates and shifting the MP curve to the right […]
Date: September 10th, 2020
If exchange rates are floating, the Fed increasing its target inflation rate will cause the dollar to ________ relative to other currencies and cause net capital outflows to ________. A) appreciate; increase B) appreciate; decrease C) depreciate; increase D) depreciate; decrease ANSWER C
Date: September 10th, 2020
Refer to Figure 12.5. If exchange rates are floating, the Fed decreasing its target inflation rate would best be represented by a movement from ________ in panel (a) and a corresponding movement from ________ in panel (b). A) point A to point B; point X to point Y B) point C to point A; point […]
Date: September 10th, 2020
Additions to the nation’s capital stock are brought about through A) the current account surplus. B) investment. C) investment and the current account surplus. D) investment and the government budget surplus. ANSWER B
Date: September 10th, 2020
According to real business cycle theory, an increase in financial frictions might lead to ________, if ________. A) a decrease in output; the rise in the credit spread causes a leftward shift of aggregate demand B) a decrease in inflation; the disruption of capital markets results in a leftward shift of long-run aggregate supply C) […]
Date: September 10th, 2020
Ceteris paribus, in a closed economy, if consumers become more optimistic ________. A) autonomous consumption would decrease B) the equilibrium interest rate should increase C) saving should increase D) all of the above E) none of the above ANSWER B
Date: September 10th, 2020
Of all financial intermediaries which holds the most assets? A) pension funds B) commercial banks C) insurance companies D) hedge funds ANSWER B
Date: September 10th, 2020
Based on the neoclassical theory of investment, which aspect of a booming economy helps to explain the procyclicality of investment? A) Tax revenues are likely to be rising. B) The real interest rate is likely to be rising. C) Capital goods are becoming more expensive. D) Financing constraints are likely to be relaxed for many […]
Date: September 10th, 2020
