Assuming an decrease in money demand, then to keep interest rates constant the Fed must

Select one:

a.

keep the money supply constant.

b.

conduct an open market sale of bonds.

c.

reduce the required ratio.

d.

both (b)and (c).

e.

None of the above

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The Bretton Woods system

Select one:

a.

established fix par values for currencies.

b.

expected countries with persistent surpluses to devalue their currencies.

c.

was to be a system of adjustable peg.

d.

was created to slow down inflation after the World War II.

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Which of the following statements is (are) correct? Regardless of whether the LM curve is vertical or upward sloping.

Select one:

a.

a money stock target is superior to an interest rate target when the uncertainty facing the policy maker concerns the IS schedule.

b.

both a money stock target or interest rate target provide the same results when the uncertainty facing the policy maker concerns the IS schedule.

c.

an interest rate target is always superior to a money stock target when the uncertainty facing concerns the IS schedule.

d.

a money stock target is never superior to an interest rate target when the uncertainty facing the policy maker concerns the IS schedule.

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Which of the following factors are included in the determination of growth rates of output in the intermediate run?

Select one:

a.

Variations in the rates of capital formation.

b.

Growth in the labor force that results from growth in the working age population as well as changes in labor force participation rates.

c.

Variations in the rate of technological change.

d.

All of the above

e.

None of the above

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The structural deficit is

Select one:

a.

directly attributable to the behavior of the economy.

b.

not directly attributable to the behavior of the economy.

c.

the result of decisions policymakers have made about the tax rates, the level of government spending, and benefit levels for transfer programs.

d.

Both (b) and (c).

In the neoclassical model, an increase in the savings rate

Select one:

a.

causes a more than proportionate increase in the capital to labor ratio.

b.

results in a less than proportionate increase in the capital to labor ratio.

c.

results in a proportionate increase in the growth rate of output.

d.

None of the above

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Under perfect capital mobility and a floating exchange rate system, expansionary fiscal policy leads to

Select one:

a.

no change in interest rates and the exchange rate.

b.

an increase in income and the interest rate.

c.

no change in the interest rate and a decrease in income.

d.

no change in the interest rate and a fall in the trade balance.

e.

an increase in interest rates and a fall in the trade balance.

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In the context of Malaysia, total credits in the balance of payments accounts are equal to

Select one:

a.

supply of foreign exchange.

b.

demand for Ringgit Malaysia (RM).

c.

demand for foreign exchange.

d.

supply of Ringgit Malaysia.

e.

Either (a) or (b).

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Which of the following hypotheses about voter behavior have been advanced in public-choice literature?

Select one:

a.

Voters are myopic.

b.

Unemployment is less likely to result in vote loss than is inflation.

c.

Deficit bias of the budget process.

d.

Both (a) and (c).

e.

All of the above.

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The higher the marginal income tax rate, the

Select one:

a.

lower the MPC out of disposable income.

b.

higher the autonomous expenditure multiplier.

c.

lower the autonomous expenditure multiplier.

d.

higher the MPC out of disposable income.