The functions of money are to serve as a
A) resource allocator, a method for accounting, and a means of income distribution.
B) unit of account, a store of value, and a medium of exchange.
C) determinant of consumption, investment, and government spending.
D) factor of production, exchange, and aggregate supply
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B) unit of account, a store of value, and a medium of exchange.
All else held constant, the international value of foreign currencies will increase
against theU.S. dollar if ________
A) U.S. citizens reduce spending on imports
B) the U.S. Federal Reserve raises real interest rates
,C) there is an increase in the number of foreign tourists in the United States
D) there are withdrawals of funds by foreigners from U.S. money markets
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D) there are withdrawals of funds by foreigners from U.S. money markets
All else held constant, if the supply of money is increased ________.
A) the demand for money will increase
B) the interest rates will rise
C) bond prices will fall
D) investment spending will increase
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D) investment spending will increase
If currency speculators believe South Korea will have much lower inflation in the
future than the United States, this will most likely cause the South Korean won to
________and the U.S.dollar to ________.
A) depreciate; depreciate
B) depreciate; appreciate
C) appreciate; appreciate
D) appreciate; depreciate
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D) appreciate; depreciate
,Suppose there is an increase in exports of U.S.-made farm equipment. There are no
changes in imports, factor income, or transfers. What must be the case:
A) There is an increase in the Financial Account Balance of the United States
B) There is a decrease in the Current Account Balance of the United States
C) There is a decrease in the Financial Account Balance of the United States
D) The Current Account Balance of the United States is unchanged
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C) There is a decrease in the Financial Account Balance of the United States
Suppose people become so convinced that interest rates cannot fall further that they
holdmoney rather than bonds. This situation is
A) known as crowding out
B) shown as a leftward shift in the investment demand
C) shown by making the aggregate demand curve steeper
D) known as a liquidity trap
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D) known as a liquidity trap
In a graph showing the market supply and demand for British pounds in terms of U.S.
dollars, the supply-of-pounds curve is upward-sloping because ________.
A) fewer British pounds can be purchased per dollar if U.S. dollars become more
expensive
B) fewer U.S. dollars can be purchased per pound if British pounds become less
expensive
, C) the British will purchase more U.S. goods or services when the dollar price of
pounds rises
D) the British will purchase more U.S. goods or services when the dollar price of
pounds falls
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C) the British will purchase more U.S. goods or services when the dollar
price of pounds rises
[MONEY Q10]Assume we begin at point a. An increase in the interest rate can be
shown as a move to________.
A) point b
B) point c
C) point d
D) point e
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A) point b
[FISCAL POLICY Q 12] Assume that the economy is in a rapid expansion with a price
level of P2 and output level Q2. The government then adopts an appropriate
discretionary fiscal policy. What will be the most likely new equilibrium price level and
output?
A) P2 and Q4
B) P1 and Q1
C) P2 and Q2
D) P1 and Q3
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A) resource allocator, a method for accounting, and a means of income distribution.
B) unit of account, a store of value, and a medium of exchange.
C) determinant of consumption, investment, and government spending.
D) factor of production, exchange, and aggregate supply
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B) unit of account, a store of value, and a medium of exchange.
All else held constant, the international value of foreign currencies will increase
against theU.S. dollar if ________
A) U.S. citizens reduce spending on imports
B) the U.S. Federal Reserve raises real interest rates
,C) there is an increase in the number of foreign tourists in the United States
D) there are withdrawals of funds by foreigners from U.S. money markets
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D) there are withdrawals of funds by foreigners from U.S. money markets
All else held constant, if the supply of money is increased ________.
A) the demand for money will increase
B) the interest rates will rise
C) bond prices will fall
D) investment spending will increase
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D) investment spending will increase
If currency speculators believe South Korea will have much lower inflation in the
future than the United States, this will most likely cause the South Korean won to
________and the U.S.dollar to ________.
A) depreciate; depreciate
B) depreciate; appreciate
C) appreciate; appreciate
D) appreciate; depreciate
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D) appreciate; depreciate
,Suppose there is an increase in exports of U.S.-made farm equipment. There are no
changes in imports, factor income, or transfers. What must be the case:
A) There is an increase in the Financial Account Balance of the United States
B) There is a decrease in the Current Account Balance of the United States
C) There is a decrease in the Financial Account Balance of the United States
D) The Current Account Balance of the United States is unchanged
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C) There is a decrease in the Financial Account Balance of the United States
Suppose people become so convinced that interest rates cannot fall further that they
holdmoney rather than bonds. This situation is
A) known as crowding out
B) shown as a leftward shift in the investment demand
C) shown by making the aggregate demand curve steeper
D) known as a liquidity trap
Give this one a try later!
D) known as a liquidity trap
In a graph showing the market supply and demand for British pounds in terms of U.S.
dollars, the supply-of-pounds curve is upward-sloping because ________.
A) fewer British pounds can be purchased per dollar if U.S. dollars become more
expensive
B) fewer U.S. dollars can be purchased per pound if British pounds become less
expensive
, C) the British will purchase more U.S. goods or services when the dollar price of
pounds rises
D) the British will purchase more U.S. goods or services when the dollar price of
pounds falls
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C) the British will purchase more U.S. goods or services when the dollar
price of pounds rises
[MONEY Q10]Assume we begin at point a. An increase in the interest rate can be
shown as a move to________.
A) point b
B) point c
C) point d
D) point e
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A) point b
[FISCAL POLICY Q 12] Assume that the economy is in a rapid expansion with a price
level of P2 and output level Q2. The government then adopts an appropriate
discretionary fiscal policy. What will be the most likely new equilibrium price level and
output?
A) P2 and Q4
B) P1 and Q1
C) P2 and Q2
D) P1 and Q3
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