FIN 350 Week 4 Quiz – Strayer
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Quiz 3 Chapter 5 and 6
Chapter
5—Monetary Policy
1. The
Fed can affect the interaction between the demand for money and the supply of
money to influence interest rates, the aggregate level of spending, and
therefore economic growth.
a.
True
b.
False
2. The
Fed can ____ the level of spending as a means of stimulating the economy by
____ the money supply.
|
a.
|
increase; decreasing
|
|
b.
|
decrease; increasing
|
|
c.
|
decrease; decreasing
|
|
d.
|
increase; increasing
|
3. A
credit crunch occurs when:
|
a.
|
interest rates decline.
|
|
b.
|
interest rates rise.
|
|
c.
|
creditors restrict the amount of loans they are
willing to provide.
|
|
d.
|
the economy is strong.
|
4. According
to the theory of rational expectations, higher inflationary expectations
encourage businesses and households to reduce their demand for loanable funds.
a.
True
b.
False
5. A
passive monetary policy adjusts money supply automatically in response to
economic conditions.
a.
True
b.
False
6. If
the Fed implemented a policy of inflation targeting, and if the U.S. inflation
rate deviated substantially from the Fed's target inflation rate, the Fed could
lose credibility.
a.
True
b.
False
7. In
general, there is:
|
a.
|
a positive relationship between unemployment and
inflation.
|
|
b.
|
an inverse relationship between unemployment and
inflation.
|
|
c.
|
an inverse relationship between GNP and inflation.
|
|
d.
|
a positive relationship between GNP and
unemployment.
|
8. A
____-money policy can reduce unemployment, and a ____-money policy can reduce
inflation.
|
a.
|
tight; loose
|
|
b.
|
loose; tight
|
|
c.
|
tight; tight
|
|
d.
|
loose; loose
|
9. A
loose money policy tends to ____ economic growth and ____ the inflation rate.
|
a.
|
stimulate; place downward pressure on
|
|
b.
|
stimulate; place upward pressure on
|
|
c.
|
dampen; place upward pressure on
|
|
d.
|
dampen; place downward pressure on
|
10. When
both inflation and unemployment are relatively high, there is more disagreement
among FOMC members about the proper monetary policy to implement.
a.
True
b.
False
11. ____
serves as the most direct indicator of economic growth in the United States.
|
a.
|
Gross domestic product (GDP)
|
|
b.
|
National income
|
|
c.
|
The unemployment rate
|
|
d.
|
The industrial production index
|
12. Which
of the following is not an indicator of inflation?
|
a.
|
housing price indexes
|
|
b.
|
wage rates
|
|
c.
|
oil prices
|
|
d.
|
consumer confidence surveys
|
13. The
____ indicators tend to occur before a business cycle.
|
a.
|
leading
|
|
b.
|
lagging
|
|
c.
|
coincident
|
|
d.
|
none of the above
|
14. The
____ indicators tend to occur after a business cycle.
|
a.
|
leading
|
|
b.
|
lagging
|
|
c.
|
coincident
|
|
d.
|
none of the above
|
15. The
____ indicators tend to occur before a business cycle.
|
a.
|
leading
|
|
b.
|
lagging
|
|
c.
|
coincident
|
|
d.
|
none of the above
|
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