Econ 202 Final
a U.S. mutual fund buys stocks issued by a Columbian company. this purchase is an example of
U.S. foreign portfolio investment. It decreases Columbia's net capital outflow
a basis for the slope of the short-run phillips curve is that when unemployment is high there are
downward pressures on prices and wages
people who hold well-diversified portfolios of stocks have greatly reduced or eliminated
firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions
if a bank uses $500 of excess reserves to make a new loan when the reserve ratio is 8 percent, this action by itself initially makes the money supply
increase by $500 while wealth does not change
other things the same, the real exchange rate between American and Chinese goods would be higher if
prices of chinese goods were lower, or the number of yuan a dollar purchased were higher
The Federal Deposit Insurance Corporation
protects depositors in the event of bank failures
according to the quantity equation, the price level would change less than proportionately with a rise in the money supply if there were also
either a rise in output or a fall in the rate at which money changes hands
when the price level falls the quantity of
consumption goods demanded and the quantity of net exports demanded both rise
in the short run, an increase in the money supply causes interest rates to
decrease, and aggregate demand to shift right
in recent years, the federal reserve has conducted policy by setting a target for the
federal funds rate
which of the following is correct
index funds typically have a higher rate of return than managed funds. This tends to support the efficient market hypothesis
HydroGrow is considering building a new greenhouse in which to grow tomatoes. The board meets and decides that this is the right thing to do. Before they can put their plans into action, the interest rate increases. The present value of the returns from this investment project
is now lower than it was before, and so Hydro Grow is less likely to build the building
contractionary monetary policy
leads to disinflation and makes the short-run phillips curve shift left
if the real exchange rate is greater than 1, then the
nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas
which tool of monetary policy does the Federal Reserve use most often?
open-market operations
inflation can be measured by the
percentage change in the consumer price index
if a country's purchase of foreign assets exceeds foreign purchases of domestic assets, that country has
positive net exports and positive net capital outflows
the efficient markets hypothesis implies
that all stocks are fairly valued all the time and that no stock is a better buy than any other
which group within the federal reserve system meets to discuss changes in the economy and determine monetary policy?
the FOMC
the discount rate is the interest rate that
the Fed charges banks for loans
when we measure and record economic value, we use money as the
unit of account
according to classical macroeconomic theory, changes in the money supply affect
variables measured in terms of money but not variables measured in terms of quantities or relative prices
Suppose that velocity rises while the money supply stays the same. It follows that
P x Y must rise
which of the following is an example of U.S. foreign direct investment
A U.S. beverage company opens a bottling plant in Russia
according to the phillips curve, policymakers could reduce both inflation and unemployment
NONE
Bill, a U.S. citizen, pays a Spanish architect to design a metal casting factory. Which country's exports increase??
Spain's
If the Fed decreases reserve requirements, the money supply will increase
TRUE
an increase in the interest rate could have been caused by
a rise in the price level causing the money-demand curve to shift rightward
other things the same, as the price level falls, a country's exchange rate
and interest rates fall
If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kaz tenge per dollar, the dollar has
appreciated, other things the same, it now takes fewer dollars to buy kaz goods
when the Fed decreases the discount rate, banks will
borrow more from the Fed and lend more to the public. The money supply increases
if households view a tax cut as temporary, then the tax cut
has less of an affect on aggregate demand than if households view it as permanent
you use U.S. currency to pay the owner of a restaurant for a delicious meal. The currency
has no intrinsic value. The exchange is not an example of barter
in the context of the aggregate-demand curve, the interest-rate effect refers to the idea, that when the price level increases
households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods
which of the following is correct?
if the Fed purchases bonds in the open market, then the money supply curve shifts right. A change in the price level does not shift the money supply curve
a company in Panama pays for a U.S. architect to design a factory building. By itself this transaction
increases U.S. exports and so increases the U.S. trade balance
when aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation
increases and unemployment decreases
one determinant of the natural rate of unemployment is the
minimum wage rate
when you rent a car, you might treat it with less care than you would if it were your own, this is an example of
moral hazard
most economists believe the principle of monetary neutrality is
mostly relevant to the long run
the effect of an increase in the price level on the aggregate-demand curve is represented by a
movement to the left along a given aggregate-demand curve
if banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, the U.S. net exports would
rise and aggregate demand would shift right
to decrease the money supply, the Fed can
sell government bonds or increase the discount rate
when the Federal Reserve increases the Federal Funds target rate, it achieves this target by
selling government bonds. This action will reduce investment and shift aggregate demand to the left
when shopping you notice that a pair of jeans costs $20 and that a t-shirt costs $10. You compute the price of jeans relative to t-shirts
the dollar price of jeans is a nominal variable; the relative price of jeans is a real variable
the discovery of a large amount of previously-undiscovered oil in the U.S. would shift
the long-run aggregate-supply curve to the right