Alberto purchases ten cups of coffee a week. The amount of money that he holds to purchase ten cups of coffee is the A) asset demand for money. B) precautionary demand for money. C) money balance demand for money. D) transactions demand for money. ANSWER D
Assuming all else equal, any change that causes a decrease in the credit supply at a given real interest rate will cause: A) the credit supply curve to shift to the right. B) an upward movement along the credit supply curve. C) a downward movement along the credit supply curve. D) the credit supply curve […]
Which of the following happens if the Fed buys bonds from a private bank? A) The Fed’s total liabilities remain unaffected. B) The private bank’s total assets remain unchanged. C) The private bank’s composition of assets remain unchanged. D) The Fed’s total assets decrease. ANSWER B
Which of the following relationships is most likely to exhibit zero correlation? A) The relationship between the amount received as unemployment benefits in China and the unemployment rate in Canada B) The relationship between education and income C) The relationship between income and savings D) The relationship between wind velocity and rotational speed of wind […]
The short-run aggregate supply curve in modern Keynesian analysis is A) downward sloping. B) horizontal. C) vertical. D) upward sloping. ANSWER D
Money is still useful during times of inflation because A) it still retains the characteristic of predictability of value. B) its opportunity cost falls as inflation rises. C) more money can be made so people can still purchase the goods and services they want. D) it is not a liquid asset. ANSWER A
________ occurs when the direction of cause and effect is mixed up in a study. A) Adverse causality B) Omitted variable bias C) Reverse causality D) Limited information bias ANSWER C
Consider the above figure. At a price level of 150 A) total planned production exceeds total planned real expenditures. B) total planned real expenditures exceed total planned real production. C) the price level would rise. D) inventories of unsold goods decline. ANSWER A
A factory in Techland could not sell 20% of its output during a certain year due to a decrease in demand for its product. Which of the following would have happened if it produced 20% less? A) Techland’s GDP would have been higher. B) Techland’s GDP would have been lower. C) Techland’s trade deficit would […]
If the Fed wants to lower the federal funds rate through open market operations, it ________. A) decreases tax rates B) increases tax rates C) sells bonds D) buys bonds ANSWER D