ECON 203 test3

ECON 203 test3 - ID: A Econ 203 Exam 3 (Spring 2007)...

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ID: A 1 Econ 203 Exam 3 (Spring 2007) Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. You buy stock and its price rises just as much as the overall price level. Thus, before taxes you made a. a nominal gain, but no real gain, yet you pay taxes on the nominal gain. b. a nominal gain, but no real gain, so you pay no taxes on the nominal gain. c. a nominal and real gain, and you pay taxes on the nominal gain. d. a nominal and real gain, but you pay taxes only on the real gain. 2. Mike, a U.S. citizen, buys $10 of cheese from France. His action alone a. increases U.S. exports by $10 and decreases U.S. net exports by $10. b. increases U.S. imports by $10 and decreases U.S. net exports by $10. c. increases U.S. exports by $10 and increases U.S. net exports by $10. d. increases U.S. imports by $10 and increases U.S. net exports by $10. 3. Monetary neutrality implies that an increase in the quantity of money will a. increase the incentive to save. b. increase employment. c. not affect the price level. d. increase the price level. 4. Holding exports unchanged, if imports rise by $150 million: a. Net exports increase by $150 million. d. Net capital outflow increases by $150 million. b. Net capital outflow is unaffected. e. More than one of the above is correct c. Net capital outflow decreases by $150 million. 5. Current U.S. currency is a. fiat money with no intrinsic value. b. commodity money with intrinsic value. c. fiat money with intrinsic value. d. commodity money with no intrinsic value. 6. In 1991 the Federal Reserve lowered the reserve requirement ratio from 12 percent to 10 percent. Other things the same this should have a. decreased both the money multiplier and the money supply. b. increased the money multiplier and decreased the money supply. c. decreased the money multiplier and increased the money supply. d. increased both the money multiplier and the money supply.
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ID: A 2 7. Which of the following is correct? a. The Federal Reserve has 14 regional banks. The Board of Governors has 12 members who serve 7-year terms. b. The Federal Reserve has 12 regional banks. The Board of Governors has 14 members who serve 7-year terms. c. The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms. d. None of the above is correct. 8. If savings does not change and investment spending rises, then net capital outflow _______. a. rises c. does not change b. falls d. Any of the above are possible 9. In the nineteenth century when there were often bank runs caused by crop failures, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, these actions by the banks should have a. decreased the money multiplier and increased the money supply. b.
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This note was uploaded on 04/02/2008 for the course ECON 203 taught by Professor Nelson during the Spring '08 term at Texas A&M.

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ECON 203 test3 - ID: A Econ 203 Exam 3 (Spring 2007)...

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