PT Ch05

PT Ch05 - Exam Name_ MULTIPLE CHOICE. Choose the one...

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Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the mid 1980s, two developments of note occurred. The first was the need for the Fed, which it publicly acknowledged, to become concerned with the level and stability of the U.S. dollar's foreign currency exchange rate. What was the second development? 1) A) It was the realization that nothing could be done to curb the instability in the financial markets. B) It was the realization that nothing could be done to provide necessary liquidity. C) It was the shocking fall in equity prices around the world in October 1987. D) It was the shocking increase in equity prices around the world after the fall in prices in October 1987. 2) Inflation in advanced economies is ________ the result of excessive demand due to monetary or fiscal policy. 2) A) frequently B) never C) always D) seldom (if ever) 3) The Fed, like any monetary policy maker, has numerous goals but focuses, at any time, on the goal ________. 3) A) that most often has political reasons for implementing. B) that is unfortunately most often irrelevant. C) that is most often neglected. D) that is most in danger of not being achieved. 4) During 1997/1998, with strong economic growth and unemployment decreasing, Alan Greenspan and the Fed were faced with a dilemma. What was this dilemma? 4) A) They had to decide whether to tighten monetary policy to slow economic growth. B) They had to decide whether or not to let the economy continue to grow at a sustainable rate equal to previous standards. C) They had to decide whether or not to tighten monetary policy to rapidly increase economic growth. D) They had to decide whether or not to loosen monetary policy to slow economic growth. 5) It is important to note that, when confronted with a supply shock, a central bank such as the Fed has two choices. Which of the below is ONE of these choices? 5) A) The banking authorities can refuse to accommodate the higher price levels that follow the shock by matching them with an increase in the money supply. B) The Fed can choose to shoot for a goal of low employment of the civilian labor force. C) The Fed can choose shoot for a goal of high unemployment of the civilian labor force. D) The banking authorities can shoot for zero unemployment. 6) The expansion in the monetary aggregates was particularly rapid from 1975 to 1978, and that expansion (along with the oil shocks) led to ________. 6) A) mild inflation and a decline in the dollar's value. B) mild inflation and a moderate decline in the dollar's value. C) serious inflation and a rise in the dollar's value. D) serious inflation and a decline in the dollar's value. 1
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PT Ch05 - Exam Name_ MULTIPLE CHOICE. Choose the one...

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