1) Financial markets and institutions
A)
involve the movement of huge flows of money.
B)
affect the profits of businesses.
C)
affect the types of goods and services produced in an economy.
D)
do each of the above.
E)
do only (a) and (b) of the above.
Answer:
D
5) Money
is defined as
A)
anything that is generally accepted in payment for goods and services or in the
repayment of debt.
B)
bills of exchange.
C)
a risk-free repository of spending power.
D)
all of the above.
E)
only (a) and (b) of the above.
Answer:
A
10) Prior
to recessions in this century, there has been a drop in
A)
inflation. B) the money stock.
C)
the growth rate of the money stock. D) interest rates.
Answer:
C
15) Evidence from business cycle fluctuations in
the United States indicates that
A)
a negative relationship between money growth and general economic activity
exists.
B)
recessions have been preceded by declines in share prices on the stock
exchange.
C)
recessions have been preceded by dollar depreciation.
D)
recessions have been preceded by a decline in the growth rate of money.
Answer:
D
20) Banks
are important to the study of money and the economy because they
A)
provide a channel for linking those who want to save with those who want to
invest.
B)
have been a source of rapid financial innovation that is expanding the
alternatives available to those wanting to invest their money.
C)
play an important role in determining the quantity of money in the economy.
D)
do each of the above.
E)
do only (a) and (b) of the above.
Answer:
D
25) Compared to fifty years ago,
A)
small savers have more options for what they can do with their savings.
B)
small savers are likely to put their savings in a savings account at a
commercial bank.
C)
small savers are likely to put their savings in a savings account at a savings
and loan.
D)
both (a) and (b) of the above are true.
E)
both (a) and (c) of the above are true.
Answer:
A
30) Stock
prices since the 1950s have been
A)
relatively stable trending upward at a steady pace.
B)
relatively stable trending downward at a moderate rate.
C)
extremely volatile.
D)
unstable trending downward at a moderate rate.
Answer:
C
35) All
else constant, as the dollar becomes stronger,
A)
Americans will purchase fewer foreign goods.
B)
U.S. goods exported abroad will
cost less in foreign countries, and so foreigners will buy more of them.
C)
the U.S. is unquestionably made better off.
D)
none of the above.
Answer:
D
40) Which
of the following are true statements?
A)
Money or the money supply is defined as anything that is generally accepted in
payment for goods and services or in the repayment of debts.
B)
The average price of goods and services in an economy is called the aggregate
price level.
C)
The aggregate price level is measured as the rate of change in the inflation
rate.
D)
All of the above are true statements.
E)
Only (a) and (b) of the above are true statements.
Answer:
E
45) Banks, savings and loan associations, mutual
savings banks, and credit unions
A)
link those who want to save with these who want to invest.
B)
play an important role in determining the quantity of money in the economy.
C)
have been adept at innovating in response to changes in the regulatory
environment.
D)
all of the above.
E)
only (a) and (c) of the above.
Answer:
E
50) In the
U.S. between 1950 and 1980, interest rates trended upward. During this same time period,
A)
the rate of money growth increased.
B)
the government budget deficit (expressed as a percentage of GNP) trended
upward.
C)
the aggregate price level continued to decrease.
D)
all of the above.
E)
only (a) and (b) of the above.
Answer:
E
55) If
ten years ago the prices of the items bought last month by the average consumer
would have been
much lower, then one can likely conclude that
A)
the aggregate price level has risen during this ten-year period.
B)
the average inflation rate for this ten-year period has been positive.
C)
the average rate of money growth for this ten-year period has been positive.
D)
all of the above.
Answer:
D
60) When compared to financial markets of twenty
years ago, today's financial markets
A)
provide small savers with greater options.
B)
limit the saving options offered to small savers.
C)
limit the lending options of small investors.
D)
do both (b) and (c) of the above.
Answer:
A
65) A declining stock market index due to lower
share prices
A)
reduces people's wealth and as a result may reduce their willingness to spend.
B)
increases people's wealth and as a result may increase their willingness to
spend.
C)
decreases the amount of funds that business firms can raise by selling
newly-issued stock.
D)
both (a) and (c) of the above.
E)
both (b) and (c) of the above.
Answer:
D
70) A stronger dollar will likely hurt
A)
textile producers in South Carolina.
B)
wheat farmers in Montana.
C)
automobile manufacturers in Michigan.
D)
all of the above since their exports will decline.
E)
none of the above since their exports will increase.
Answer:
D
75) From
1980 to early 1985 the dollar _____ in value, thereby, benefiting American
_____.
A)
appreciated; consumers B) appreciated, businesses
C)
depreciated; consumers D) depreciated, businesses
Answer:
A
80) When in
1980 a British pound cost approximately $2.40, a Shetland sweater that cost 50
British pounds would have cost $120.
With a stronger dollar, the same Shetland sweater would have cost
A)
less than $120.
B)
more than $120.
C)
$120, since the exchange rate does not affect the prices that American
consumers pay for foreign goods.
D)
$120, since the demand for Shetland sweaters will decrease to prevent an
increase in price due to the stronger dollar.
Answer:
A
85) When
the total value of final goods and services is calculated using current prices,
the resulting measure is referred to as
A)
real GDP. B)
the GDP deflator.
C)
nominal GDP. D) the index of leading indicators.
Answer:
C