ECOMacroFinal1

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Author:
hydeab
ID:
188528
Filename:
ECOMacroFinal1
Updated:
2012-12-10 16:36:45
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Economics
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Description:
Macro Economic Unit 3 test
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  1. The problem of double coincidence of wants is associated with:
    barter system
  2. A bank's assets consist of $500,000 in total reserves, $1,600,00 in loans, and a building worth $1,200,000. Its liabilities and capital consist of $2,00,000 in demand deposits and $1,300,00 in capital.
    If the required reserve ratio is 10%, what is the level of the bank's excess reserves? How much could it loan out as a result?
    $300,000;$3,000,000
  3. A bank's assets consist of $500,000 in total reserves, $1,600,00 in loans, and a building worth $1,200,000. Its liabilities and capital consist of $2,00,000 in demand deposits and $1,300,00 in capital.
    If the required reserve ration is 10%, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?
    $300,000; $3,000,000
  4. Other things being equal, if you took money out of your demand deposit account and put it in a savings deposit account;
    M1 would fall but M2 would not change
  5. A decrease in the percentage of money people want to hold as currency and a decrease in the fraction of deposits banks want to hold as excess reserves. The money supply in the banking system would:
    increase
  6. If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response
    increasing the discount rate
  7. Which of th efollowing would constitute contractionary monetary policy by the Fed?
    Open market sales of government securities, an increase in the discount rate, and an increase in reserve requirements.
  8. If the Fed sells bonds, the short run impact of this policy will tend to include:
    an increase in real interest rates
  9. If the monetary authorities persistantly expand the money supply at a rapid rate, the probable result will be:
    inflation and high nominal interest rates
  10. If velocity is growing by 2% per year and real output is growing 6% per year, according to the equation of exchange, in order to maintain stable prices, the money supply would have to:
    grow by 4%
  11. M1 includes:
    cash, checking account balances, and travelers' checks
  12. A barter system is less desirable than using oney for exchange because:
    it is a more inefficient and a time consuming process
  13. Which of the following assests is most liquid?
    A funds in a savings account
    B ten acres of land
    C a television
    D a car
    A funds in a savings account
    (this multiple choice question has been scrambled)
  14. If the reserve requirement is 15% and a customer makes a new cash deposit of $50,000, how much new excess reserves are created?
    $42,500
  15. Demad deposits are:
    liabilities of banks, assets of depositors.
  16. Which of the following is true?
    a. Items that supply the nation's currency to the foreign exchange market are recorded as credits in the nation's balance of payments accounts.
    b. Items that create a demand for the nation's currency in the foreign exchange market are recorded as debits in the nation's balance of payments accounts.
    c. The purchase of a BMW from a German automaker by a U.S. college professor would be recorded as a debit in the U.S. balance of payments accounts.
    d. Both a. and b. are correct.
    C
  17. Suppose that the exchange rate between British pounds and U.S. dollars is originally $2.50 per pound. If it then changes to $3 for 1 pound, the price of U.S. goods to British importers will:
    a. rise.
    b. fall.
    c. stay the same.
    d. change in an indeterminate direction.
    B
  18. If the rate of inflation in the United States rises relative to the rate of inflation in foreign nations, U.S. net exports will tend to __________, causing the exchange value of the U.S. dollar to __________.
    a. rise; rise
    b. rise; fall
    c. fall; rise
    d. fall; fall
    D
  19. If real interest rates in the United States rise relative to real interest rates in other countries, other things being equal,
    a. the exchange value of the dollar would decline relative to other currencies.
    b. the exchange value of the dollar would increase relative to other currencies.
    c. there would likely be no effect on the exchange value of the dollar relative to other currencies.
    d. there would be an indeterminate effect on the exchange value of the dollar relative to other currencies.
    B
  20. A country would tend to experience currency depreciation relative to other countries if:
    a. the profitability of investments in other countries increases relative to that country.
    b. people in the foreign currency markets expect the value of the currency to fall in the near future.
    c. the foreign demand for its exports decreases.
    d. any of the above occurs.
    e. any of the above except c. occurs.
    D
  21. If the dollar appreciates relative to the yen, we would expect:
    a. that the Japanese trade surplus with the United States would increase.
    b. that Japanese imports from the United States would decrease.
    c. that Japanese exports to the United States would decrease.
    d. a. and b. to occur.
    D
  22. Because central banks intervene in currency markets, the term __________ has been used to describe the system.
    a. organized
    b. planned
    c. dirty float
    d. flexible
    e. controlled
    C
  23. Which of the following is true?
    a. U.S. imports are considered a credit item in the balance of payment, because the dollars sold to buy the necessary foreign currency add to foreign claims against U.S. buyers.
    b. When the U.S. runs a trade deficit in goods and services with the rest of the world, the rest of the world must be running a trade surplus in goods and services with the U.S.
    c. When the U.S. runs a trade deficit in goods, it must run a trade surplus in services.
    d. None of the above is true.
    B
  24. A decrease in tastes for European goods in the U.S. would __________ the demand for Euros, __________ the equilibrium price (exchange value) of Euros.
    a. increase; increasing.
    b. increase; decreasing.
    c. decrease; increasing.
    d. decrease; decreasing.
    D

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