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