Econ 212-Spring 2006 Exam 3

Econ 212-Spring 2006 Exam 3 - SPRING, 2006 ECONOMICS 212...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
SPRING, 2006 ECONOMICS 212 D. K. BENJAMIN THIRD EXAM Print and encode your name student number and TA number on the scoring sheet. If you fail to do these actions correctly, you will be penalized five points . Mark on the scoring sheet the correct answer to each question. There are thirty (30) questions, each with only ONE correct answer. If you mark more than one answer to a question, you will receive zero credit. Engage brain before putting pencil in gear. Go Tigers . Questions 1 through 3 are based on the following: Currency = 500 Reserves = 800 Deposits = 2100 1. The value of the monetary base is a. 500 b. 800 c. 1300 d. 2100 e. 2600 2. The money supply is a. 500 b. 800 c. 1300 d. 2100 e. 2600 3. The value of the money multiplier is a. 1 b. 1.5 c. 2 d. 2.5 e. 3 4. An open market purchase of bonds by the Fed will a. increase the monetary base and thus increase the money supply b. decrease the money multiplier and thus decrease the money supply c. simultaneously decrease the monetary base and increase the money multiplier, thereby leaving the money supply unchanged d. decrease the monetary base and thus decrease the money supply e. increase the money multiplier and thus increase the money supply 5. An open market purchase of bonds by the Fed can a. help prevent the money supply from rising if other forces are tending to increase the money multiplier b. help prevent the money supply from falling if the reserve-deposit ratio is rising for other reasons c. help prevent the money supply from falling if the C/D ratio is rising for other reasons d. partly or completely offset a simultaneous decrease in reserve requirements e. both (b) and (c) are correct
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6. Suppose banks decide to hold a lower ratio of reserves to deposits. Which of the following will result? a. the money multiplier will fall b. the money supply will be unchanged in the long run, because the resulting lower reserve-deposit ratio will cause the monetary base to rise c. prices will be higher in the short run and the long run, compared to the initial equilibrium d. the money multiplier will rise e. answers (c) and (d) are correct 7. An increase in the currency-deposit ratio would be expected to have which of the following consequences? a. higher prices in the short run and the long run b. unchanged output in the short run and the long run c. lower prices in the short run and the long run d. lower output in the short run and the long run e. none of the above Questions 8-10 are based on the following information. Suppose the economy is in dynamic long run equilibrium, with output growing at its steady state rate. Now suppose that the rate of growth of the monetary base is decreased. 8. In the short run, compared to the initial long run equilibrium,
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/29/2008 for the course ECON 212 taught by Professor Lady during the Spring '07 term at Clemson.

Page1 / 5

Econ 212-Spring 2006 Exam 3 - SPRING, 2006 ECONOMICS 212...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online