Chapter 11--MacroTB - CHAPTER 11 Monetary Policy and the...

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MULTIPLE-CHOICE 1. Which of the following is(are) the mission of the Federal Reserve Bank? i. Preserve price stability. ii. Foster economic growth and employment. iii. Ensure taxes are fair. a. i only. b. ii only. c. iii only. d. i and ii. e. i and iii. Answer: d. Section: 11.1 2. Which of the following is(are) the mission of the Federal Reserve Bank? i. Preserve price stability. ii. Foster stable fiscal policy. iii. Ensure taxes are fair. a. ii only. i only. c. iii only. d. i and ii. e. i and iii. Answer: b. Section: 11.1 3. Which of the following is(are) the mission of the Federal Reserve Bank? i. Preserve price stability. ii. Foster economic growth and employment. iii. Promote a stable financial system. a. i only. ii only. c. iii only. d. All of the above. e. i and ii. Answer: d. Section: 11.1 4. What is the main policy tool available to the Federal Reserve? a. reserve rate b. discount rate c. federal funds rate d. printing money e. mortgage rate Answer: c. Section: 11.1 5. What is the main policy tool available to the Federal Reserve? a. discount rate b. federal funds rate c. government expenditures d. printing money e. taxes Answer: b. Section: 11.1 110 Monetary Policy and the Phillips Curve CHAPTER 11
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Monetary Policy and the Phillips Curve | 111 6. The structure of the short-run model is best described as which of the following? a. Nominal interest rate Real interest rate Short- run output Change in inflation b. Nominal interest rate Real interest rate Change in inflation c. Nominal interest rate Short-run output Change in inflation d. Real interest rate Short-run output Change in inflation Nominal interest rate e. Short-run output Change in inflation Real interest rate Nominal interest rate Answer: a. Section: 11.1 7. The MP curve stands for __________ and describes __________. a. monopoly pricing; how firms set prices b. monetary policy; how the Federal Reserve sets the inflation rate c. monetary policy; how the federal government sets short-run output fluctuations d. money-prices; how the Federal Reserve sets the inflation rate e. monetary policy; how the Federal Reserve sets the real interest rate Answer: e. Section: 11.1 8. The federal funds rate is a. equal to the rate of inflation. b. the interest rate at which banks borrow from the Federal Reserve. c. the interest rate at which banks borrow from and loan to each other overnight. d. an interest rate that is some fixed amount above the prime lending rate. e. the return to stock markets over the long term. Answer: c. Section: 11.2 9. The link between real and nominal interest rates is called a. the MP curve. b. the Phillips curve. c. Okun’s law. d. the Fisher equation. e. Jones’s equality. Answer: d. Section: 11.2 10. According to the Fisher equation, the nominal interest rate is equal to a. the rate of inflation. b. the real interest rate minus the rate of inflation.
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This note was uploaded on 01/20/2011 for the course ACCT ACCT 3371 taught by Professor Smart during the Spring '10 term at Rensselaer Polytechnic Institute.

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Chapter 11--MacroTB - CHAPTER 11 Monetary Policy and the...

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