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The strengthening in the U.S. dollar in comparison to other
currencies would have the effect of making which of the following
true?
A. U.S. exports less competitive than domestic goods only, no
effect on Foreign imports.
B. U.S. exports more competitive than domestic goods only, no
effect on Foreign imports
C. Foreign imports less competitive than U.S. goods & U.S. exports
more competitive than domestic goods.
D. Foreign imports more competitive than U.S. goods & U.S. exports
less competitive than domestic goods.
ANSWERS: D. Foreign imports more competitive than U.S. goods &
U.S. exports less competitive than domestic goods.
,Interest rates rise and yields on money market instruments increase
well above interest rates offered by banks. Investors, therefore,
invest directly in the higher yielding instruments with funds they
have withdrawn from banks. This is known as which of the
following?
A. Intermediation
B. Disintermediation
C. Crowding out
D. The multiplier effect
ANSWERS: B. Disintermediation
,The Federal Reserve Board has three tools to regulate the
economy: Open market operations, reserve requirements, and
margin requirements. If the Federal Reserve Board wishes to
stimulate a sluggish economy, it would do so by doing which of the
following?
A. Selling U.S. Government securities in the open market & Raising
reserve requirements & Reducing margin requirements.
B. Buying U.S. Government securities in the open market & Raising
reserve requirements & Increasing margin requirements.
C. Selling U.S. Government securities in the open market &
Lowering reserve requirements & Increasing margin requirements.
D. Buying U.S. Government securities in the open market &
Lowering reserve requirements & Reducing margin requirements.
ANSWERS: D. Buying U.S. Government securities in the open market &
Lowering reserve requirements & Reducing margin requirements.
, When a member bank of the Federal Reserve System borrows from
the Federal Reserve Bank in its district, it will pay the:
A. Prime rate.
B. Federal funds rate.
C. Call rate.
D. Discount rate
ANSWERS: D. Discount rate
This is normally indicated when GNP has decreased for two
consecutive quarters.
A. Inflation
B. Deflation
C. Expansion
D. Recession
ANSWERS: D. Recession