Homework answers / question archive / Question 1 (1 point)     An increase in which of the following factors (from the perspective of the domestic country) would cause an appreciation of the domestic currency in the long run? Question 1 options: a)  expected future exchange rate b)  relative import demand c)  relative productivity d)  of the above   Question 2 (1 point)     An increase in a country’s trade barriers will cause the _____ for its currency to shift to the Question 2 options: a)  supply, left

Question 1 (1 point)     An increase in which of the following factors (from the perspective of the domestic country) would cause an appreciation of the domestic currency in the long run? Question 1 options: a)  expected future exchange rate b)  relative import demand c)  relative productivity d)  of the above   Question 2 (1 point)     An increase in a country’s trade barriers will cause the _____ for its currency to shift to the Question 2 options: a)  supply, left

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Question 1 (1 point)

 

 

An increase in which of the following factors (from the perspective of the domestic country) would cause an appreciation of the domestic currency in the long run?

Question 1 options:

	a)  expected future exchange rate
	b)  relative import demand
	c)  relative productivity
	d)  of the above

 

Question 2 (1 point)

 

 

An increase in a country’s trade barriers will cause the _____ for its currency to shift to the

Question 2 options:

	a)  supply, left.
	b)  supply, right.
	c)  demand, right.
	d)  demand, left.

Question 3 (1 point)

 

 

Most currency trading takes place

Question 3 options:

	a)  between central banks.
	b)  via over-the-counter-trading.
	c)   on a centralized exchange.
	d)  none of the above.

Question 4 (1 point)

 

 

A rise in the real interest rate in a country causes its currency to

Question 4 options:

	a)  remain unchanged
	b)  depreciate
	c)  cannot be determined
	d)  appreciate

Question 5 (1 point)

 

 

In practice, the primary tool used by the Federal Reserve to control the money supply is

Question 5 options:

	a)  open market operations.
	b)  buying commercial paper.
	c)  the reserve requirement.
	d)  discount lending.

Question 6 (1 point)

 

 

A change in which of the following tools shifts the demand for reserves?

Question 6 options:

	a)  discount lending
	b)  the reserve requirement
	c)  open market operations
	d)  all of the above.

Question 7 (1 point)

 

 

The goal of quantitative easing is to _____.

Question 7 options:

	a)  increase the prices of (decrease the yields of) Treasury bonds and increase the money supply directly
	b)  decrease the prices of (increase the yields of) Treasury bonds and decrease the money supply directly
	c)  decrease the prices of (increase the yields of) Treasury bonds in order to control inflation
	d)  increase the prices of (increase the yields of) Treasury bonds in order to control inflation

Question 8 (1 point)

 

 

In practice, discount lending is used

Question 8 options:

	a)  to ease a financial panic.
	b)   set a minimum for the federal funds rate.
	c)  to control the money supply.
	d)  to control the foreign exchange rate

Question 9 (1 point)

 

 

Central banks make money from interest on

Question 9 options:

	a)  notes
	b)  reserves
	c)  loans
	d)  the multiplier

Question 10 (1 point)

 

 

Which of the following is a liability of the Fed?

Question 10 options:

	a)  bonds
	b)  they are all liabilities of the Fed
	c)  discount loans
	d)  bank reserves

Question 11 (1 point)

 

 

If the Fed sells $50 in securities and the reserve requirement is 25%, according to the simple formula for the money multiplier, the money supply

Question 11 options:

	a)  rises by $50.
	b)  rises by $200.
	c)  falls by $200.
	d)  falls by $50.

Question 12 (1 point)

 

 

If the Fed buys $100 in securities and the reserve requirement is 10%, according to the simple formula for the money multiplier, the money supply

Question 12 options:

	a)  rises by $100.
	b)  falls by $100.
	c)  falls by $1000.
	d)  rises by $1000.

Question 13 (1 point)

 

 

Which of the following is a difference between Keynes liquidity preference theory and the modern quantity theory of money?

Question 13 options:

	a)  The modern quantity theory predicts that interest rate changes have little effect on money demand unlike the liquidity preference theory.
	b)  The liquidity preference theory assumes the return on money to be 1, unlike the modern quantity theory of money.
	c)  The liquidity preference theory assumes velocity to be constant, unlike the modern quantity theory of money.
	d)  The modern quantity theory of money specifies 1 asset instead of 3 assets like the liquidity preference theory.

Question 14 (1 point)

 

 

A liquidity trap occurs when

Question 14 options:

	a)  money demand falls.
	b)  inflation is zero.
	c)  nominal interest rates are zero.
	d)  all of the above.

Question 15 (1 point)

 

 

Which of the following is equivalent to velocity?

Question 15 options:

	a)  MV/PY
	b)  YP/M
	c)  MP/Y
	d)  none of the above

Question 16 (1 point)

 

 

People holding money in anticipation that bond yields will rise is an example of

Question 16 options:

	a)  money demand for transactions.
	b)   precautionary demand.
	c)  speculative demand.
	d)  outsourcing

Question 17 (1 point)

 

 

In Keynes’s model, a(n) _____ in interest rates can decrease the _____ demand for money.

Question 17 options:

	a)  increase, transactions
	b)  decrease, speculative
	c)  increase, speculative
	d)  decrease, transactions

Question 18 (1 point)

 

 

Which of the following is an asset of the Fed?

Question 18 options:

	a)  Federal Reserve notes
	b)  bank reserves
	c)  gold
	d)  they are all liabilities of the Fed

Question 19 (1 point)

 

 

Exchange rates are determined in

Question 19 options:

	a)  the money market
	b)  the foreign exchange market
	c)  the stock market
	d)  the capital market

Question 20 (1 point)

 

 

When the Fed raises the reserve requirement, the _____ of reserves shifts

Question 20 options:

	a)  supply, left
	b)  demand, right
	c)  demand, left
	d)  supply, right