final review - econ 201 a review carlos benito Multiple...

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econ 201 a review carlos benito Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The demand for private investment has a. A direct relationship with the expected rate of return b. An inverse relationship with realt interest rate c. All of the above d. None of the above ____ 2. Fiscal or monetary policies are efficient a. Even under conditions of social inestability b. Under conditions of great uncertainty c. Under conditions of social stability d. None of the above ____ 3. A reserve requirement of 20 percent implies a potential money deposit multiplier of a. 4. b. 5. c. 20. d. 25. ____ 4. If the required reserve ratio is 10 percent, a bank with a new deposit of $1,000 a. must keep $100 on reserve and can make up to $900 in new loans. b. must keep $200 on reserve and can make up to $800 in new loans. c. must keep $900 on reserve and can make up to $100 in new loans. d. must keep $1,000 on reserve and can make no additional loans. ____ 5. The highest interest rates in the world are found in countries a. that have followed a monetary policy that is highly restrictive. b. with governments that have run large budget surpluses. c. with governments that have run sizable budget deficits. d. that have followed an expansionary monetary policy that resulted in high rates of inflation. ____ 6. A barter economy is one in which a. money serves as a medium of exchange. b. only precious metals are accepted as money. c. goods are traded directly for other goods. d. paper money is backed by gold. ____ 7. Money is a. valuable because it is backed by gold. b. the item that is commonly used as a means of payment for goods, services, assets, and out- standing debt. c. an asset that can be used to store purchasing power for future use. d. Both b and c are correct. ____ 8. A bank receives a demand deposit of $1,000. The bank loans out $600 of this deposit and increases its excess reserves by $300. What is the legal reserve requirement? a. 10 percent b. 20 percent c. 30 percent d. 60 percent ____ 9. A shift to a more expansionary monetary policy will
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a. help bring inflation under control. b. exert a stabilizing impact on the economy if the effects of the policy are felt during an eco- nomic downturn. c.
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final review - econ 201 a review carlos benito Multiple...

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