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plugin-exam_2 - Econ 302 Banking and Monetary Policy...

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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. 4) If there is excess demand for money, there is 5) When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________. 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.
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