Question 1

The __________ rule is a form of monetary policy that stipulates that for each 1% increase in inflation, the Fed should increase the nominal interest rate by more than 1%.

Group of answer choices

• Greenspan
• Bernanke
• Friedman
• Taylor

Question 2

Why were many of the Fed's action restricted prior to 1935?

Group of answer choices

• The Fed was interfering in foreign exchange issues.
• The Fed's far-reaching powers were curtailed by the federal government.
• The Fed's Federal Open Market Committee (FOMC) had yet to be formed.
• The Fed still had to comply with the gold standard.

Question 3

The rightward shift of the AS curve produces __________.

Group of answer choices

• a fall in real output and income
• a rise in real output and income
• negative economic growth
• short-term economic growth

Question 4

Fiscal policy will have its greatest impact if monetary policy is __________.

Group of answer choices

• contractionary
• expansionary
• accommodating
• opposing

Question 5

When individuals acquire, process, and act on relevant economic information promptly in their own self-interest and investigate its impact on others, they are said to have __________ expectations.

Group of answer choices

• rational
• recursive
• adaptive
• passive

Question 6

Of the following, which is the best definition of money multiplier?

Group of answer choices

• the ratio of a bank's assets to its required reserves
• the ratio of the actual money supply to the monetary base
• the positive difference between last year's inflation rate and this year's
• the positive difference between public-held currency and bank reserves

Question 7

Economists widely blame the 1937 economic downturn on the fact that the Fed chose to __________.

Group of answer choices

• raise interest rates
• oversell federal bonds
• lower reserve requirements
• raise reserve requirements

Question 8

What does a graph of the Phillips curve reveal?

Group of answer choices

• the relationship between unemployment and inflation
• the effect of government spending on unemployment
• the effect of the money supply on unemployment
• the relationship between wages and inflation

Question 9

In the mid-1970s, when inflation rates rose rather quickly and surprisingly, what occurred?

Group of answer choices

• Nominal wages and unemployment fell.
• Real wages and employment rose.
• Nominal wages and the value of personal assets rose.
• Real wages and the value of personal assets fell.

Question 10

When the Fed sets an interest rate target, on what interest rate does it specifically focus?

Group of answer choices

• the T-bill rate
• the nominal rate
• the prime rate
• the federal funds rate