macroeconomics final

If real GDP equals 1,500, nominal GDP equals 3,750, then what is the velocity of money if the money stock equals 1,875?

2

Which of the following events will increase the domestic real interest rate in an open economy?

a decrease in domestic saving

If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using money as:

a medium of exchange

If you post your car on eBay with a Buy-It-Now price of $1,800, you are using money as

a unit of account

When it takes more of a foreign currency to buy each unit of the domestic currency, ___ happens to domestic currency

appreciation

is an increase in the value of a currency relative to other currencies

appreciation

When an individual deposits currency into a checking account

bank reserves increase, (which allows banks to lend more and increases the money supply.)

consumption possibilities < production possibilities

closed economy

At each value of the domestic interest rate, decreases in the riskiness of domestic assets _____ capital outflows

decrease

Holding constant risk and the real returns available abroad, lower domestic real interest rates ____ capital inflows

decrease

Holding constant risk and the real returns available abroad, lower domestic real interest rates _____ net capital inflows

decrease

In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ______ capital inflows

decrease

In an open economy, an increase in the government's budget deficit will ______ the level of capital investment in the country, holding other factors constant

decrease

The Fed lowers the discount rate and increases discount lending. Nominal interest rates will _____

decrease

The fed decreases the reserve requirement for commercial banks. Nominal interest rates will _____

decrease

decreased interest rates ____ the demand for a currency

decrease

decreased interest rates ____ the market equilibrium value of the exchange rate

decrease

easy monetary policy ____ interest rates

decrease

stock prices increase when interest rates _____

decrease

stock prices increase when risk premium _____

decrease

is a decrease in the value of a currency relative to other currencies

depreciation

The United States imports shoes from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be _____ the world price of shoes.

greater

the coupon rate is ______ for bonds that are very risky such as junk bonds

higher

At each value of the domestic interest rate, decreases in the riskiness of domestic assets ____ capital inflows

increase

At each value of the domestic interest rate, decreases in the riskiness of domestic assets ____ net capital inflows

increase

Holding constant risk and the real returns available abroad, lower domestic real interest rates _____ capital outflows

increase

In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ______ the equilibrium domestic real interest rate

increase

In an open economy, an increase in the government's budget deficit will ______ the domestic real interest rate

increase

The Fed conducts open market sales of government bonds to the public. Nominal interest rates will _____

increase

The Fed increases the reserve requirement for commercial banks. Nominal interest rates will _____

increase

stock prices increase when expected future dividends _____

increase

During the Great Depression in the United States between 1930 and 1933, banks' reserve/deposit ratio ______ and the amount of currency held by the public ____, while the money supply ______.

increased, increased, decreased

According to the quantity equation, if velocity and real GDP are constant, and the Federal Reserve increases the money supply by 5 percent, then the price level:

increases by 5%

When the central bank buys $1,000,000 worth of government bonds from the public, the money supply:

increases by more than $1,000,000

The current price of a stock increases when

interest rates decrease

The benefit of holding money is

its useful in carrying out transactions

The coupon rate on newly issued bonds is usually ______ for bonds with favorable tax treatment, such as municipal bonds

lower

consumption possibilities > production possibilities

open economy

If domestic saving is greater than domestic investment, then a country will have a positive net capital _____

outflow

An economy with a trade surplus must also have:

positive net capital outflows

Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries:

reduce the cost of getting information about borrowers

The money multiplier is equal to 1 when:

reserves = deposits

deposit insurance system bad because?

taxpayers might need to cover losses

the opportunity cost of holding money is _____

the nominal interest rate

If the United States has a $300 billion net capital inflow, then there must be a:

trade deficit of $300 billion

If domestic saving is greater than domestic investment, then a country will have a ______

trade surplus