Macroeconomics Chapter 15 Quiz April 13, 2021
ANTONIO NEVAREZ
Please make your best efforts to answer these questions correctly, if you prefer high
scores to low scores.
1)
Individuals hold precautionary balances in order to
A) Take advantage of future changes in bond prices.
B) Make anticipated expenditures.
C) Pay for emergency purchases.
D) Make speculative purchases.
2)
Currency held by the public plus balances in transactions accounts are the
A) Total reserves.
B) Money supply (M1).
C) Required reserves.
D) Money supply (M2).
3)
The money supply M2 includes M1
A) Plus balances in savings accounts and money market mutual funds.
B) Plus balances in savings accounts, money market mutual funds, and currency in
private bank vaults
and in the Federal Reserve vaults.
C) Minus balances in savings accounts and money market mutual funds.
D) Minus balances in savings accounts, money market mutual funds, and short-term
certificates of deposit
(six months or less).
4)
Mark holds $100 in cash in his wallet to make purchases for gas and groceries. This
represents the
A) Precautionary demand for money.
B) Transactions demand for money.
C) Speculative demand for money.
D) Market demand for money.
5)
The federal funds rate is the interest rate for
A) Reserves borrowed from the Fed.
B) Money lent to a bank's best business customers.
C) Reserves lent by banks to the Fed.
D) Interbank reserve loans.
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6)
Currency held by the public, balances in transactions accounts, plus balances in most
savings accounts and
money market mutual funds are the
A) Money demand.
B) Federal funds.
C) Money supply (M1).
D) Money supply (M2).
7)
Money held to buy bonds in the future represents the
A) Transactions demand for money.
B) Bond broker demand for money.
C) Interest earning demand for money.
D) Speculative demand for money.
8)
The long-term rate of unemployment, determined by structural forces in labor and
product markets,
defines the
A) Frictional rate of unemployment.
B) Seasonal rate of unemployment.
C) Natural rate of unemployment.
D) Cyclical rate of unemployment.
9)
The speculative, transactions, and precautionary demands for money added together
give the
A) Market demand curve for money.
B) Monetarist demand-for-money curve.
C) Keynesian liquidity trap.
D) Market supply curve for money.
10)
Which of the following groups believes monetary policy to be effective for fighting
inflation but not for
changing real output?
A) Keynesian economists.
B) Classical economists.
C) Monetarists.
D) Neo-Keynesian economists.
11)
The money supply curve as determined by current Federal Reserve policy is
A) Vertical since it's not determined by the interest rate.
B) Horizontal since it's not determined by the interest rate.
C) Upward-sloping to the right.
D) Downward-sloping to the right.
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12)
Using the equation of exchange, the existence of a natural rate of unemployment implies
that in the long
run:
A) Velocity in the equation of exchange is actually very unstable.
B) Monetary policy affects only the rate of inflation.
C) Quantity of real output in the equation of exchange varies in proportion to money
supply.
D) The rate of unemployment can be permanently reduced by more expansionary
monetary and fiscal
policies.
13)
The equilibrium rate of interest is determined by
A) Money demand and money supply.
B) The U.S. Treasury.
C) The president of the Federal Reserve Bank of New York.
D) The Federal Closed Market Committee.
14)
____________ is the price paid for the use of money.
A) Gold
B) Monetary policy
C) Fiscal policy
D) The interest rate
15)
The equation of exchange can be stated as
A) MV = PQ.
B) PV = MQ.
C) MP = VQ.
D) MQ = V ÷ P.
16)
The use of money and credit controls to change the macroeconomy is
A) Monetary policy.
B) Considered ineffective by most economists.
C) No longer used in the United States.
D) Fiscal policy.
17)
Monetarists argue that
A) The velocity of money is constant.
B) Fiscal policy puts idle money balances to work, which reduces V.
C) When there is a recession, people accumulate money balances, which
increases V.
D) The velocity of money increases as much as total spending falls so that MV remains
constant.
18)
Monetary restraint is associated with all of the following except
A) A decrease in interest rates.
B) A decrease in the money supply.
C) An increase in the reserve requirement.
D) A decrease in aggregate demand.
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19)
The quantity of money people are willing and able to hold at alternative interest rates,
ceteris paribus, is
known as the
A) Demand for money.
B) Supply of money.
C) Equilibrium of money.
D) None of the choices are correct.
20)
Money held to take advantage of future financial opportunities is the
A) Transactions demand for money.
B) Precautionary demand for money.
C) Speculative demand for money.
D) Portfolio demand for money.
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