Econ_199_Win_06_Exam__3

Econ_199_Win_06_Exam__3 - Introduction to Macroeconomics...

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Allen R. Sanderson Economics 19900 Winter 2006 THIRD HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 20 points total. 1. The Fed’s purchase of U.S. government securities will: a. increase commercial bank loans. b. be an effective anti-inflationary policy. c. decrease bank reserves. d. force the discount rate and Federal funds rate higher. e. decrease the money supply. 2. Who would generally not support (or be the least supportive) of fixed-rules policies? a. Milton Friedman b. Keynesians c. McCallum d. monetarists e. the European Central Bank 3. The Quantity Theory of Money asserts that: a. real GDP is not influenced by changes in the money supply. b. a 10 percent increase in the money supply will result in a 10% increase in real GDP. c. a 10 percent change in the money supply will result in a 10% change in velocity. d. there is a long-term relationship between money growth and the rate of inflation. e. the equation of exchange is only true for a barter economy. 4. Which of the following do we not usually associate with being part of the money-creation process? a. excess reserves b. the FDIC c. the Fed d. commercial banks making loans e. required reserve ratios 5. Suppose you cash in a Certificate of Deposit at Hyde Park Bank and convert it to a traveler’s check for your spring-break trip to Fort Lauderdale. The result of this swap would be: a. an increase in both M1 and M2. b. an increase in M1 but a decrease in M2. c. a decrease in M1 but an increase in M2. d. an increase in M1, with M2 remaining unchanged. e. an increase in M2, with M1 remaining unchanged. 6. By “double coincidence of wants” we mean or are referring to: a. one disadvantage of a barter system that the use of money overcomes. b. the unlikely simultaneous equality between investment needs by businesses and saving decisions by households. c. deposits in commercial banks equaling in timing and amount how much will be loaned out. d. other countries’ use of U.S. dollars, which complicates the Fed’s ability to control the money supply. e.
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Econ_199_Win_06_Exam__3 - Introduction to Macroeconomics...

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