I’ll post the answers after 5 responses. Questions: 1) A country is experiencing a core inflation rate of 7% during a recessionary period of real GDP growth. If the central bank has a single mandate to achieve price stability and uses inflation targeting with an acceptable range of zero to 4%, its monetary policy response is most likely to decrease: A) GDP growth in the short run. B) short-term interest rates. C) the foreign exchange value of the country’s currency. 2) If a country’s economy is growing at an unsustainably rapid rate and the central bank decreases its target overnight interest rate, the country’s: A) long-term rate of economic growth will increase. B) inflation rate is likely to increase. C) expected rate of inflation is likely to decline. 3) Which of the following items is least likely to be included in the M1 measure of the money supply? A) Checking account deposits owned by businesses. B) Travelers’ checks. C) Currency held at banks. 4) Which of the following statements about the demand for and supply of money is least accurate? A) As gross domestic product rises, the demand for money balances also rises. B) As the interest rate rises, the supply of money also rises. C) As inflation rises, the demand for money by households and businesses also rises. 5) If the money interest rate is measured on the y-axis and the quantity of money is measured on the x-axis, the money supply curve is: A) vertical. B) downward sloping to the lower right. C) upward sloping to the upper right. 6) Which of the following statements about the demand and supply of money is most accurate? People who are: A) holding money when interest rates are lower will try to increase their money balances and, as a result, the supply of money increases. B) holding money when interest rates are higher will try to reduce their money balances and, as a result, the demand for money decreases. C) buying bonds to reduce their money balances will increase the demand for bonds with an associated increase in interest rates. 7) In a recent economic forum meeting, Jason Federmeyer of the Bank of Detroit, and Lawrence Lobovsky of the Bank of Tulsa, were discussing the demand for money and how it has changed over the years. Federmeyer made the following two statements to Lobovsky: Statement 1: Financial innovation has significantly affected the demand for money. The increased use of credit cards and debit cards, interest-bearing checking accounts, internet banking and even the large number of ATMs around the world have all helped to increase the demand for money above what it would have been if only the increase in real GDP were at work. Statement 2: Although the quantity of money demanded is largely determined by interest rates, the supply of money is determined by the central bank and is independent of interest rates. Are Statement 1 and Statement 2 as made by Federmeyer CORRECT? Statement 1 Statement 2 A) Incorrect Correct B) Incorrect Incorrect C) Correct Correct 8) If households are holding larger real money balances than they desire, which of the following is least likely? A) The interest rate is higher than its equilibrium rate in the market for real money balances. B) The central bank must sell securities to absorb the excess money supply and establish equilibrium. C) The opportunity cost of holding money balances will decrease.
Great set of questions Damil4real, i’ve been meaning to get to them. Economics is a weak spot of mine, so here is my shot…I promise nothing: 1) C 2) B 3) C 4) B 5) B 6) B 7) C 8) B (although I kinda want to say A, I need to verify these answers) Answering these questions has reinforced my will to review economics some more, thanks!!!
C B C B A C A A
A B C B B A A A
C B C B B C C C
A C C B C B B C
A B C C B C C A I too promise nothing…
It should be C B C B A B C A according to me
1A 2B 3C 4A 5C 6C 7A 8C Damil4real, please provide the answers
Damil4real don’t forget to provide the answers Thank you for all the questions you are posting, it is proving quite helpful. Where do you get all these questions?
- A 2. B 3. C 4. B 5. A 6. B 7. A 8. A
These questions I provided more than a month ago! I’m going to have to find where I saved the answers!
Oh please do, got this feeling i am going to get 20% only
B B C A A C A A