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Unformatted text preview: Econ 302 Name ____________________________________________ Banking and Monetary Policy Professor Abrams 2008 Spring Directions: Circle the letter and mark the answer sheet for the best answer t o each of the following 42 questions. The test will be returned to you. Please mark both the test and the answer sheet. Good Luck. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) During a recession, the supply of bonds ________ and the supply curve shifts to the ________, everything else held constant. A) increases; right B) increases; left C) decreases; left D) decreases; right 2) Everything else held constant, when the inflation rate is expected to rise, interest rates will _________; this result has been termed the ________. A) fall; Fisher effect B) rise; Keynes effect C) fall; Keynes effect D) rise; Fisher effect 3) When the expected inflation rate increases, the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. A) increases; decreases; falls B) decreases; increases; rises C) decreases; decreases; falls D) increases; increases; rises 4) If there is excess demand for money, there is A) excess supply of bonds. B) too much money. C) excess demand for bonds. D) equilibrium in the bond market. 5) When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________. A) demand for; fall B) supply of; fall C) supply of; rise D) demand for; rise 6) A rise in the price level causes the demand for money to ________ and the interest rate to ________, everything else held constant. A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase 7) When the Fed decreases the money supply, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant. A) right; falls B) left; falls C) right; rises D) left; rises 8) An increase in the riskiness of corporate bonds will ________ the price of corporate bonds and ________ the price of Treasury bonds, everything else held constant. A) reduce; increase B) increase; reduce C) reduce; reduce D) increase; increase 9) Which of the following short- term securities has the lowest interest rate?...
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This note was uploaded on 12/12/2010 for the course ECON ECON302 taught by Professor Abrams during the Fall '10 term at University of Delaware.
- Fall '10
- Monetary Policy