62. As noted in the article about trading pits,

a. futures pits in Chicago were closing down.

b. futures pits in New York were closing down.

c. floor trading on the New York Stock Exchange were closing down.

d. All of the above.

e. Only A and B of the above.

63. Which of the following are among the lessons that we can reasonably draw from the collapse of Continental Illinois?

a. The aggressive pursuit of commercial loans was doomed to failure.

b. A high return on assets is not enough to offset a low return on equity.

c. The failure, and default, of any large borrower caused the banks failure.

d. Massive aid from the Fed, the FDIC and other banks can save any large bank.

e. While their strategy was risky, there wasnt any single cause of their failure.

106. The highest 30 year monthly mortgage rate of interest since 1971 was in:

a. August of 2011.

b. March of 2007.

c. July of 1991.

d. October of 1981.

e. None of the above.

Exam 4

For the next three questions, use the graph, above, which shows the aggregate demand (AD), the short run aggregate supply (AS-sr) and the long run aggregate supply (AS-lr) for an economy:

12. Suppose that the Fed tries to stimulate the economy so that equilibrium income/output rises to a level above Q*. Which of the points above would be consistent with a new short run equilibrium?

a. Point A.

b. Point B.

c. Point C.

d. Point D.

e. None of the above.

13. Suppose that the Fed tries to stimulate the economy so that equilibrium income/output rises to a level above Q* and that economic agents do not suffer from money illusion nor is there a lag in adjusting wage levels to price changes. Which of the points above would be consistent with a new short run equilibrium?

a. Point A.

b. Point B.

c. Point C.

d. Point D.

e. None of the above.

14. Suppose that the Fed has been trying to stimulate the economy so that equilibrium income/output rises to a level above Q* but it has stopped this policy. Meanwhile, economic agents have factored this policy into their decision-making and continue to do so. Which of the points above would be consistent with a new short run equilibrium?

a. Point A.

b. Point B.

c. Point C.

d. Point D.

e. None of the above.

24. The aggregate demand slopes down to the right because as the price level falls:

a. our income will buy more goods.

b. our money will buy more goods.

c. we buy less of other goods and more of these goods.

d. our expectations change and we decide it is a good time to buy more goods.

e. All of the above.

29. Which of the following is more associated with the Keynesian view than the Monetarist view?

a. Recessions are primarily the result of a falling money supply.

b. Markets can rebound from a recession rather quickly.

c. Monetary policy is weak in fighting a recession in that it works by affecting investment.

d. Monetary policy rules should guide monetary policy.

e. Balancing the federal government budget while raising spending is likely to be counterproductive.

39. Following the initiation of the bank holiday in 1933:

a. nearly two in five national banks failed to reopen.

b. most big city banks were closed for about sixty days.

c. bank depositors continued to withdraw their funds until late in 1935.

d. the crisis for the banking sector, for all intents, was over.

e. about 99% of all state chartered banks were able to reopen.

45. Why was the depression of 1920-1921 over so quickly? Among the reasons generally cited are that:

a. the Federal Reserve kept interest rates high until the threat of inflation ended.

b. President Wilson suffered a stroke and did not devote his energies toward the depression.

c. President Harding was of the opinion that the federal government should stay out of the way of the depression.

d. Congress reduced spending to balance its budget.

e. All of the above.

50. Instead of drifting back into a prolonged depression following the end of World War II, what happened from 1945 to 1947 that fueled American prosperity?

a. Millions of women left the labor force as millions of men re-entered.

b. Millions of non-manufacturing jobs were created as real wages fell.

c. Private sector investment boomed as government deficits shrank.

d. Exports grew, further stimulating American production.

e. All of the above.

72. The exchange rate between the U.S. and Japan can be interpreted as:

a. the price of U.S. currency in terms of the Japanese currency.

b. the cost of obtaining funds in the U.S. relative to the cost of obtaining funds in Japan.

c. the difference between the interest rates in the U.S. and Japan.

d. All of the above.

e. None of the above

76. A decrease in the exchange rate (from the U.S. perspective) will cause:

a. the prices of foreign goods sold in the U.S. to decrease.

b. the prices of U.S. goods abroad to decrease.

c. the amount of U.S. goods abroad to increase

d. the prices of U.S. goods produced and sold at home to increase.

e. All of the above.

86. If the foreign interest rate is 5%, the current exchange rate is 4 and the domestic interest rate is 10%, what is the expected future exchange rate according to the interest parity condition?

a. 4.0

b. 4.2

c. 4.4

d. 4.6

e. None of the above

90. Capital flows are restricted under:

a. the gold standard.

b. the Bretton Woods System.

c. Unmanaged free floating rates.

d. Managed rates.

e. All of the above.

92. The so-called law of one price will hold as long as:

a. transportation costs are relatively low.

b. taxes arent more than 5% different across countries.

c. trade restrictions have been fully negotiated between countries.

d. goods are not identical.

e. None of the above.

98. To deal with a problem of rapidly rising inflation the Fed is likely to have to act in a way that Dr. Foster likened to the:

a. Hunger games.

b. Ender's gambit.

c. Joker policy.

d. Texas Hold 'em strategy.

e. Armageddon option.

100. Under which president(s) did our economic recovery enjoy the highest average annual growth in real GDP?

a. Reagan.

b. Obama.

c. Bush/Clinton.

d. Bush.

e. Trump.

102. Rickards maintains that the U.S. dollar nearly ceased being the worlds reserve currency in:

a. 1952.

b. 1965.

c. 1978.

d. 1984.

e. 1999.

103. According to Salerno, the government of Greece will be able to impose negative interest rates on peoples deposits by:

a. requiring that old currency be exchanged for new currency at a discount.

b. imposing a fee on cash withdrawal from bank accounts.

c. hiding it in the income tax.

d. automatically shrinking these deposits by 0.25% per month.

e. eliminating all cash transactions.

104. Salerno maintains that the so-called war on cash in the United States began with the passage of:

a. the National Banking Act of 1863.

b. the Federal Reserve Act of 1913.

c. the Smoot-Hawley tariff of 1930.

d. the Glass-Steagall Act of 1933.

e. the Bank Secrecy Act of 1970.

109. To say that the Fed is run by Keynesians means that they:

a. believe in using tax cuts to stimulate the economy.

b. believe in using government spending to stimulate the economy.

c. believe that economic recovery is driven by the demand side.

d. believe that economic recovery is driven by the supply side.

e. Both A and B of the above.

114. The TV personality that questioned Bernankes statement that the Fed wasnt printing money was:

a. Johnny Carson.

b. Bill Maher.

c. Conan OBrien.

d. Jon Stewart.

e. Jay Leno.

120. The free market route to economic recovery following a recession is to:

a. allow asset prices to fall.

b. allow consumption to fall.

c. allow saving to rise.

d. All of the above.

e. None of the above.