Question one.

Question 45

Question text

An upward-sloping yield curve indicates that Treasury securities with ______________ maturities offer ______________ annualized yields.

Select one:

A. longer; lower

B. longer; higher

C. shorter; lower

D. shorter; higher

E. 2 and 3

Question 46

Question text

Assume that annualized yields of short-term and long-term securities are equal. If investors suddenly believe interest rates will increase, their actions may cause the yield curve to

Select one:

A. become inverted.

B. become flat.

C. become upward sloping.

D. be unaffected.

Question 47

Question text

The time between a monetary policy action being taken and when such action has a significant influence upon prices, employment, and economic output is called:

Select one:

A. Recognition Lag

B. Policy Lag

C. Impact Lag

D. Legal Lag

Question 48

Question text

A ______ dollar tends to exert inflationary pressure in the U.S.

Select one:

A. stable

B. strong

C. weak

D. Both 1 and 2 are correct.

Question 49

A loose money policy tends to ______ economic growth and ______ the inflation rate.

Select one:

A. stimulate; place downward pressure on

B. stimulate; place upward pressure on

C. dampen; place upward pressure on

D. dampen; place downward pressure on

Question 50

The statement sent by the FOMC to the New York Federal Reserve Bank's trading desk is known as the

Select one:

A. monetary order.

B. operational imperative.

C. policy directive.

D. economic outlook.

Two.

1) Approximately what percentage of U.S. output was exported to foreigners in 2012?

115%

14%

1%

25%

2) The nominal exchange rate is

the difference between the interest rate in one country and the interest rate in another country.

the price of one country's currency in terms of another's.

the rate at which a stock may be exchanged for currency.

the rate at which a bond may be exchanged for currency.

8) Nominal exchange rates differ from real exchange rates in that nominal exchange rates

do not correct for differing interest rates across countries.

do not measure the purchasing power of the currency.

are fixed, while real exchange rates are flexible.

are flexible, while real exchange rates are fixed.

12) Suppose the exchange rate is 10 pesos per dollar and you use $1000 to purchase a one-year Mexican bond that pays 10% interest. Next year, the exchange rate is 11 pesos per dollar. Assuming you convert your funds back to U.S. dollars, how much money will you have in one year?

$1000

$1100

$91

$0

48) How many times has the Fed has changed reserve requirements since 1995?

never.

about once a year.

only once.

only twice.

50) In the federal funds market diagram, a decrease in the required reserve ratio

shifts the demand curve for reserves to the left.

increases the federal funds rate.

results in a multiple expansion of deposits, which increases the equilibrium level of reserves held by banks.

shifts the supply curve for reserves to the right.

51) In order to increase its target for the federal funds rate, the Fed would normally

conduct open market sales.

conduct open market purchases.

increase the discount rate.

increase reserve requirements.

54) An open market purchase:

increases the monetary base.

decreases the monetary base.

55) When did the Fed first begin to use open market operations as a policy tool?

The 1920s

The 1930s

The 1960s

The 1980s

increases the federal funds rate.

is another name for a discount loan.

61) Primary dealers are those

permitted to trade directly with the Fed.

who work under the account manager at the Federal Reserve Bank of New York.

who specialize in selling bonds to small private investors.

responsible for assuring that interest rates do not decline unless the FOMC has given specific instructions that they decline

67) Which central bank has its exchange rate as a focus of its monetary policy?

Bank of Canada

Bank of England

European Central Bank

Federal Reserve.