Money and Banking Practice Questions

Money and Banking Practice Questions - Practice...

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Practice Multiple-Choice Questions for Money and Banking Why Study Money, Banking, and Financial Markets: Chapter 1 Money appears to have a major influence on a. inflation. b. the business cycle. c. interest rates. *d. each of the above. Budget deficits are important to study in a money and banking class because a. budget deficits cause banks to fail. b. without budget deficits banks would not exist. *c. budget deficits may influence the conduct of monetary policy. d. of each of the above. An increase in the growth rate of the money supply is most likely to be followed by a. a recession. b. a decline in economic activity. *c. inflation. d. all of the above. A sharp decrease in the growth rate of the money supply is most likely to be followed by *a. a decline in economic activity. b an upswing in the business cycle. c. inflation. d. all of the above. Suppose that due to a fear that the United States is about to enter a long period of stagnant growth, stock prices fall by 50% on average. Predict what would happen to spending by consumers. a. spending would probably increase. *b. spending would probably fall. c. spending would probably be unaffected. d. the change in spending would be ambiguous. Budget deficits can be a concern because they might a. ultimately lead to lower inflation. b. lead to lower interest rates. *c. lead to a higher rate of money growth which causes inflation. d. cause all of the above to occur. 1
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Which of the following is most likely to result from a stronger euro? *a. U.S. goods exported aboard will cost less in Germany, and so Germans will buy more of them. b. U.S. goods exported aboard will cost more in Germany, and so Germans will buy more of them. c. U. S. goods exported abroad will cost more in Germany, and so Germans will buy fewer of them. d. Americans will purchase more foreign goods. Which of the following are true statements? a. Inflation is defined as a continual increase in the money supply. b. Inflation is a condition of a continually rising price level. c. The inflation rate is measured as the rate of change in the aggregate price level. *e. Only (b) and (c) of the above are true statements. When the dollar depreciates in value, it benefits_______ and harms________. *a. American exporters; American consumers b. American exporters; foreign consumers c. foreign exporters; American exporters d. foreign exporters; American tourists The Federal Reserve System is: a. a large commercial bank b. another name for the U.S. Treasury *c. the central bank in the United States d. the organization that insures bank deposits in the U.S. When a nation's money supply persistently increases at a faster rate than the nation can increase its output of goods and services, which of the following happens? a.
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Money and Banking Practice Questions - Practice...

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