Econ_199_Win_05_Exam__3

Econ_199_Win_05_Exam__3 - Introduction to Macroeconomics...

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Introduction to Macroeconomics Allen R. Sanderson Economics 19900 Winter 2005 THIRD HOUR EXAMINATION Name (Please Print): ______________________________________ [44 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 23 points total. 1. The major income-earning asset of a commercial bank is its ___________________ and its major liability is __________________________ . a. loans; demand deposits b. reserves; Federal Reserve Notes c. time deposits; government bonds d. securities; loans outstanding e. interest-bearing checking accounts; loans from other banks 2. The United States’ biggest trading partner is: 3. The major difference between M1 and M2 is that: 4. If two currencies allow for the equal value of money such that the same bundle of goods will cost the same in both countries, we refer to this as: 5. If you purchase for $1,000 a bond that pays $50 annually to the holder, and then “the” (that is, the market) interest rate rises to 8 percent, a. the price of the bond will fall to $625. b. the price of the bond will increase to $1,600. c. the price of the bond will increase to $1,030. d. the price of the bond will fall to $970. e. the price of the bond will not change, just the amount it pays to its holder next year. 6. The “double coincidence of wants” problem generally arises: a. with individual barter transactions or in a barter economy in general. b. in international trade contexts because some countries just don’t want what other countries may have to offer. c. when one uses money as a medium of exchange. d. whenever savers don’t want to lend the same amount of funds as investors want to borrow. e. because the Fed’s monetary policy actions do not coincide with an administration’s fiscal policy goals. 1
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