ECO 4223 Approved Review Midterm Exam 2026

ECO 4223 Approved Review Midterm Exam 2026 When individuals employ a ________ clearing mechanism to process a transaction, they must rely on some trusted third party. With a _______ clearing mechanism, the transaction is processed by the two parties engaged in the transaction without reliance on a trusted third party. Centralized; decentralized The blockchain technology is an example of a _______ clearing mechanism. Distributed When an blockchain is updated via a proof of ____ mechanism, the probability that a user running the protocol produces an appropriate hash depends on the relative share of tokens she holds. Stake The bitcoin protocol adjust the difficulty of hashing a block every _______ 2016 blocks Bitcoin's block rewards is cut in half every ________ 210,000 blocks A decrease in the demand for bitcoin has the immediately effect of _____ the purchasing power of bitcoin and the subsequent effect of _______ Decreasing; decreasing the marginal cost of producing bitcoin Economists use the term_____ to denote a situation where the price of an asset is greater than its fundamental value. Bubble Prohibitions on the use of bitcoin, like those placed on exchanges in China, tend to ______ the value of bitcoin. Decrease ECO 4223 ECO 4223 Innovations like the lightening network, which enable to make more bitcoin transactions than can be supported on the bitcoin blockchain settlement layer to ______ the value of bitcoin. Increase Economists say an asset is subject to _____ effects when an individual's demand for the asset depends on how many other people use it. Network With _______ the purchasing power of money rises or falls to equal the marginal cost of production. With ________ the marginal cost of production rises and falls to equal the purchasing power of money. Bitcoin; fiat monies 1 bitcoin can be divided into 100,000,000 ____________. Sats The supply of bitcoin is ____________. Predetermined Which of the following cryptocurrencies is a stablecoin? Tether Holding a stablecoin is ___________ risky than holding that stablecoin's reference currency. More Many regulators and lawmakers have compared stablecoins to __________. Private banknotes Unit banking laws prevented banks from __________. Opening up additional branches Relatively few state-chartered banks converted to national banks until _________ The federal government levied a 10 percent tax on state banknotes In Franco Modigliani's lifecycle hypothesis, the representative agent is assumed to have a real income that _________. Starts low, rises to a peak, then declines. When desired consumption is greater than real income early in one's life, before he or she has amassed wealth, consumption smoothing requires one _______. ECO 4223 ECO 4223 Borrow When desired consumption is greater than real income late in one's life, after he or she has amassed wealth, consumption smoothing will typically occur by _______. Borrowing According to Franco Modigliani's lifecycle hypothesis, the representative agent will ______ in her prime earning years. Save Franco Modigliani's lifecycle hypothesis shows that borrowing can improve one's lifetime happiness or utility because _________. It enables consumption smoothing According to Milton Friedman's permanent income hypothesis, an unexpected loss of $100 will typically reduce current consumption by ______ $100. Less than According to Milton Friedman's permanent income hypothesis, the unexpected gift of an annuity that pays $100 per year in perpetuity will increase the recipient's current consumption by ______ an unexpected gift of $100 More than Which of the following contributes to one's wealth? All of the above To reduce the total amount of interest paid, one should generally repay her ______ loans first. Highest rate The ________ rate is the price paid to a lender for borrowing funds over a period of time. The borrower agrees to repay the ______ plus interest. Interest; principal Sophia deposits $2000 into a savings account that pays an annual interest rate of 4%, which compounds monthly. After 10 years, Sophia will have roughly ______ in her account. $2982 When the real interest rate increases, the quantity of funds borrowed and lent must ______. ECO 4223 ECO 4223 None of the above If savers become less patient, the real interest rate will ______ and the quantity of loanable funds will _____. Increase; decrease If total factor productivity growth rises, the real interest rate will ________ and the quantity of loanable funds will ________. Increase; decrease Government borrowing results in a ______ real interest rate and ______ private sector borrowing. Higher; less Ex-ante, borrowers and lenders know _____. How much they are willing to pay or accept in real terms. Suppose expected inflation is 2 percent and the equilibrium real interest rate is 3 percent. According to the Fisher equation, the equilibrium nominal interest rate is ____________ percent. 5 (3+2) = 5 Consider the following statements: Five-year traditional Treasuries and five-year TIPS have the same issuer risk.Il. Five year traditional Treasuries and five-year TIPS have the same duration risk.III. Five-year traditional Treasuries and five-year TIPS have the same inflation risk. I and Il are true If the the five-year traditional Treasury rate is 4 percent and the five-year TIPS rate is 2