Quiz - Chapters 25 and 31

Quiz - Chapters 25 and 31 - Points Awarded 169.00 Points M...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Points Awarded 169.00 Points Missed 1.00 Percentage 99.4% 1. Ben Bernanke has suggested that a core inflation rate of ________ is the equivalent of price stability. A) between 1 percent to 2 percent B) zero C) less than 5 percent. D) less than zero Points Earned: 1.0/1.0 Correct Answer(s): A 2. Usually, the Federal Reserve changes its target for the federal funds rate in units of A) ¼ of 1 percentage point. B) 1 percentage point. C) 2 percentage points. D) 5 percentage points.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Points Earned: 1.0/1.0 Correct Answer(s): A 3. An instrument rule is based on ________ of the economy while a targeting rule is based on ________ of the economy. A) the current state; a forecast B) the current state; the previous state C) a forecast; the current state D) the previous state; the current state Points Earned: 1.0/1.0 Correct Answer(s): A 4. The Taylor rule uses three variables to determine the target for the federal funds rate. Which of the following is NOT one of those variables? A) monetary base B) equilibrium real interest rate C) inflation rate
Background image of page 2
D) output gap Points Earned: 1.0/1.0 Correct Answer(s): A 5. Suppose the inflation rate is 3 percent and the output gap is -1 percent. Assuming the equilibrium real interest rate is 2 percent, using the Taylor rule, what target should the Fed set for the federal funds rate? A) 5 percent B) 6 percent C) 4 percent D) 1 percent Points Earned: 1.0/1.0 Correct Answer(s): A 6. If the Fed buys U.S. government securities, A) the federal funds rate will fall. B) the federal funds rate will rise.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C) bank reserves will decrease. D) the discount rate will rise. Points Earned: 1.0/1.0 Correct Answer(s): A 7. In an open market purchase, the Fed ________ government securities, which ________ bank reserves. A) buys, increases B) buys, decreases C) sells, increases D) sells, decreases Points Earned: 1.0/1.0 Correct Answer(s): A 8. If the interest rate on Treasury bills is higher than the federal funds rate, the quantity of overnight loans supplied ________ and the ________ for Treasury bills increases. A) decreases; demand
Background image of page 4
B) decreases; supply C) increases; demand D) increases; supply Points Earned: 1.0/1.0 Correct Answer(s): A 9. If the Fed lowers the federal funds rate, then A) investment and consumption expenditure decrease. B) the price of the dollar rises on the foreign exchange market and so net exports decrease. C) a multiplier process that affects aggregate demand occurs. D) All of the above answers are correct.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

Quiz - Chapters 25 and 31 - Points Awarded 169.00 Points M...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online