Finace

Part I: Multiple-Choice: [1 point each]

1. If the Markets Desk at the New York Federal Reserve Bank purchases T-bills, this will:

1. Increase the Federal Funds Rate

2. Decrease the Federal Funds Rate

3. Raise the value of the dollar on the foreign exchange market

4. Lower the value of the dollar on the foreign exchange market

5. Both a and c

6. Both a and d

7. Both b and c

8. Both b and d

2. Demand influences production according to (choose the answer/answers that does/do NOT apply):

1. Classical Economics

2. Keynesian Economics

3. Monetarists

4. New Classical Economics

5. New Keynesian Economics

3. For a country to peg its exchange rate, the country’s central bank must (choose the answer/answers that does/do NOT apply):

1. Keep monetary autonomy

2. Change the money supply

3. Buy short term bonds

4. Buy foreign exchange

5. Accumulate reserves

4. GDP in 1981 was $2.96 trillion. It grew to $3.07 trillion in 1982, yet the quantity of output actually decreased. This is because:

1. Prices increased

2. GDP is not the same as Real GDP

3. Statistical discrepancies caused in error in the 1981 reading

4. Double counting occurred in 1982.

5. a and b

6. a and c

7. a and d

8. b and c

9. b and d

10. c and d

5. If the number of unemployed is 5 million, the number of employed is 20 million, and the population between 16 and 65 years of age that is not retired or institutionalized is 50 million, then the unemployment rate is:

1. 25 percent

2. 20 percent

3. 10 percent

4. 7.1 percent

5. 6.6 percent

6. Assume that the US and Europe are the only two countries in the world. US Real GDP will grow as a result of:

1. Domestic Investment in Europe being greater than domestic savings

2. The sale of short-term bonds by the European Central Bank.

3. A decline in the value of the euro relative to the dollar

4. All of the above

5. None of the above

6. a and b

7. a and c

8. b and c

7. Oil...