3rdexam_practice_f2011-2

# 3rdexam_practice_f2011-2 - Name Discussion Section...

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Name______________________________________________ Discussion Section Instructor____________________________ *Note if you do not know your TA’s name, you will be deducted 1 point Econ 102: Fall 2011 (Eudey) Practice Third Exam The exam is worth 50 points. Please circle your selection in the multiple choice problems, and write your answer in the space provided for the short-answer problems. Each multiple-choice question is worth 1 point. Short-answer questions are each worth from 1 to 4 points, as indicated at the start of each short-answer problem. No books or notes are allowed during the exam.

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Write a short answer in the space provided. 1. (3 points) Explain the three different types of money demand. Multiple Choice: Circle the letter for the best answer from the choices provided 2. Selling government bonds through open market operations allows the Federal Reserve to A) decrease money in the Treasury. B) decrease the money supply in the private sector. C) receive discounts on future sales. D) receive a high rate of interest on the bonds.
3. The rate of interest charged to commercial banks by the Fed for loans is called the ________ rate. A) federal funds B) discount C) prime D) commercial paper Write a short answer in the space provided. 4. (1 point) Assume the FOMC expands the availability of cheap dollar- loans to European-Union banks. What would be the likely impact on U.S. bond prices? Explain briefly.

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5. (1 point) Assume the FOMC expands the availability of cheap dollar- loans to European Union banks. What would be the likely impact on the value of the dollar in terms of euros? Explain briefly. Multiple Choice: Circle the letter for the best answer from the choices provided 6. If a bond is to pay off one year from now for \$440 and the interest rate is 10 percent, what is the price of the bond? A) \$44 B) \$400 C) \$440 D) \$484 7. Based on the model of the money market, if the Federal Reserve increases the reserve requirement, the equilibrium interest rate should A) stay the same. B) increase. C) decrease. D) increase to the same extent that the demand for money increases.
the ________ market. A) stock B) bond C) money D) exchange Indicate whether the following statements are true or false 9. If the actual interest rate in the money market is higher than the equilibrium interest rate, there would be an excess supply of money. 10. An increase in the money supply will appreciate a country's currency.

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3rdexam_practice_f2011-2 - Name Discussion Section...

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