1)Why is it important that the leadership of a central bank be independent?

a)Central bankers who pursue popular policies are more likely to be re-appointed.

b)Central bankers who pursue independent policies are more likely to serve multiple terms.

c)Central bankers who feel that they need to pursue popular policies might not take hard decisions on when to rein in inflation.

Central bankers who ignore political realities are unlikely to make good decisions

1)Which of the following will tend to lead to an increase in the interest rate?

a)The central bank increases the discount rate.

b)The central bank decreases the reserve rate.

c)The currency appreciates.

d)The money supply increases.

1)Why might a country pursuing an export led strategy manipulate its currency to be less valuable than it would be if it were left to float freely?

a)Making its exports more expensive will increase the level of revenues.

b)Making its imports more expensive will increase the level of tariff income.

c)Making its exports less expensive will force local firms to increase productivity.

d)Making its exports less expensive will increase exports.

1)In 1973, the OPEC countries imposed an oil embargo against certain western countries.This could accurately be described as:

a)The illegal action of an international cartel.

b)A negative supply shock.

c)A major cause of the deflation that was to follow.

d)A trough in the Kondratieff cycle.