Chapter 5 Quiz - Quiz Ch 5 PDF

Preview

Summary

Quiz Ch 5...

Description



Question 1 1 out of 1 points

If the Fed attempts to reduce inflation, it would likely increase money supply growth. Selected Answer: Correct Answer:



False Fals e

Question 2 1 out of 1 points

A weak dollar would stimulate ____, discourage ____, and ____ the U.S. economy. Selected Answer:

b.

U.S. exports; U.S. imports; stimulate

Correct Answer:



b.

U.S. exports; U.S. imports; stimulate

Question 3 1 out of 1 points

One of the disadvantages of inflation targeting is that the Fed could lose credibility is the U.S. inflation rate deviates substantially from the Fed's target inflation rate. Selected Answer: Correct Answer:



True Tru e

Question 4 1 out of 1 points

The Fed is usually more willing to monetize the debt when inflation is relatively high. Selected Answer: Correct Answer:



False Fals e

Question 5 1 out of 1 points

According to the theory of rational expectations, higher inflationary expectations encourage businesses and households to reduce their demand for loanable funds. Selected Answer: Correct Answer:



False Fals e

Question 6 1 out of 1 points

The time between when the Fed adjusts the money supply and when interest rates change reflects the

Selected Answer:

a.

impact lag.

Correct Answer:



a.

impact lag.

Question 7 1 out of 1 points

According to the theory of rational expectations, if the Fed uses open market operations in order to increase the supply of loanable funds, the ultimate effect on interest rates is definitely Selected Answer:

c.

the impact on interest rates can not be determined.

Correct Answer:



c.

the impact on interest rates can not be determined.

Question 8 1 out of 1 points

If the Fed implemented a policy of inflation targeting, and if the U.S. inflation rate deviated substantially from the Fed's target inflation rate, the Fed could lose credibility. Selected Answer: Correct Answer:



True Tru e

Question 9 1 out of 1 points

According to the theory of rational expectations, ____ inflationary expectations encourage businesses and households to ____ their demand for loanable funds in order to borrow and make planned expenditures increase. Selected Answer: Correct Answer:



d.

higher; increase d.

higher; increase

Question 10 1 out of 1 points

Costner National, a commercial bank, obtains short-term deposits and makes longterm fixed-rate loans. It should be adversely affected when the Fed: Selected

d.

Answer: Correct Answer:



uses a tight-money policy. d.

uses a tight-money policy.

Question 11 1 out of 1 points

The ____ indicators tend to occur after a business cycle. Selected Answer: Correct Answer:



b.

lagging b.

lagging

Question 12 1 out of 1 points

In general, there is: Selected Answer: Correct Answer:



d.

an inverse relationship between unemployment and inflation. d.

an inverse relationship between unemployment and inflation.

Question 13 1 out of 1 points

Inflation is commonly the result of a Selected Answer: Correct Answer:



a.

high level of aggregate demand. a.

high level of aggregate demand.

Question 14 1 out of 1 points

A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates. Selected Answer: Correct Answer:



c.

upward; upward c.

upward; upward

Question 15 1 out of 1 points

Which of the following is not a disadvantage of inflation targeting?

Selected Answer:

Correct Answer:

c.

The Fed's complete focus on inflation could result in much higher interest rates, which would discourage economic growth. c.

The Fed's complete focus on inflation could result in much higher interest rates, which would discourage economic growth....