Question 1

If the Federal Reserve wants to increase interest rates, it can

Accepted Answer

A)  sell short-term government bonds. 
B)  increase the reserve requirement. 
C)  purchase short-term government bonds. 
D)  increase the discount rate. 
A)  sell short-term government bonds. 
B)  increase the reserve requirement. 
C)  purchase short-term government bonds. 
D)  increase the discount rate.

Question 2

From 1992 until the end of the decade, the US economy

Accepted Answer

A)  experienced a shifting of the IS curve to the right because of increased business optimism and tight fiscal policy. 
B)  experienced a shifting of the IS curve to the left due to an increase in interest rates. 
C)  experienced a movement down and to the right along the IS curve. 
D)  experienced a shifting of the IS curve to the left due to a decrease in the baseline level of investment spending. 
A)  experienced a shifting of the IS curve to the right because of increased business optimism and tight fiscal policy. 
B)  experienced a shifting of the IS curve to the left due to an increase in interest rates. 
C)  experienced a movement down and to the right along the IS curve. 
D)  experienced a shifting of the IS curve to the left due to a decrease in the baseline level of investment spending.

Question 3

The major determinant of the term premium is

Accepted Answer

A)  expectations of the expected profitability of investment projects. 
B)  expectations of future monetary policy. 
C)  expectations of future consumption spending. 
D)  expectations of future government purchases. 
A)  expectations of the expected profitability of investment projects. 
B)  expectations of future monetary policy. 
C)  expectations of future consumption spending. 
D)  expectations of future government purchases.

Question 4

The slope of the investment function

Accepted Answer

A)  tells us by how much investment spending is discouraged by a one-unit increase in the short-term, risky, nominal interest rate. 
B)  tells us by how much investment spending is discouraged by a one-unit increase in the long-term, risky, real interest rate. 
C)  tells us what the level of investment spending would be if the long-term, risky, real interest rate were 0. 
D)  tells us what the level of investment spending would be if the short-term, risky, nominal interest rate were 0. 
A)  tells us by how much investment spending is discouraged by a one-unit increase in the short-term, risky, nominal interest rate. 
B)  tells us by how much investment spending is discouraged by a one-unit increase in the long-term, risky, real interest rate. 
C)  tells us what the level of investment spending would be if the long-term, risky, real interest rate were 0. 
D)  tells us what the level of investment spending would be if the short-term, risky, nominal interest rate were 0.

Question 5

The intercept of the IS curve depends on each of the following except

Accepted Answer

A)  the baseline level of consumption expenditures 
B)  the baseline level of the real exchange rate. 
C)  the tax rate. 
D)  the exchange rate sensitivity of imports. 
A)  the baseline level of consumption expenditures 
B)  the baseline level of the real exchange rate. 
C)  the tax rate. 
D)  the exchange rate sensitivity of imports.

Question 6

During the 1990s,

Accepted Answer

A)  real GDP increased, the unemployment rate decreased and the inflation rate increased significantly. 
B)  real GDP increased, the unemployment rate increased and the inflation rate increased significantly. 
C)  real GDP increased, the unemployment rate decreased and the inflation rate was fairly stable at a low level. 
D)  real GDP increased, the unemployment rate decreased and the inflation rate was been negative. 
A)  real GDP increased, the unemployment rate decreased and the inflation rate increased significantly. 
B)  real GDP increased, the unemployment rate increased and the inflation rate increased significantly. 
C)  real GDP increased, the unemployment rate decreased and the inflation rate was fairly stable at a low level. 
D)  real GDP increased, the unemployment rate decreased and the inflation rate was been negative.

Question 7

During 2002 and 2003, the US economy

Accepted Answer

A)  experienced a shifting of the IS curve to the right because of increased business optimism and tight fiscal policy. 
B)  experienced a shifting of the IS curve to the left due to an increase in interest rates. 
C)  experienced a movement down and to the right along the IS curve. 
D)  experienced a shifting of the IS curve to the left due to a decrease in the baseline level of investment spending. 
A)  experienced a shifting of the IS curve to the right because of increased business optimism and tight fiscal policy. 
B)  experienced a shifting of the IS curve to the left due to an increase in interest rates. 
C)  experienced a movement down and to the right along the IS curve. 
D)  experienced a shifting of the IS curve to the left due to a decrease in the baseline level of investment spending.

Question 8

The slope of the IS curve depends on each of the following except

Accepted Answer

A)  the tax rate. 
B)  the level of foreign real GDP. 
C)  the interest rate-sensitivity of investment spending. 
D)  the exchange rate sensitivity of exports. 
A)  the tax rate. 
B)  the level of foreign real GDP. 
C)  the interest rate-sensitivity of investment spending. 
D)  the exchange rate sensitivity of exports.

Question 9

Each of the following is a source of fluctuations in investment spending except

Accepted Answer

A)  the real interest rate r. 
B)  changes in investors' expectations about future output growth. 
C)  changes in households' expectations about future risk. 
D)  changes in investors' expectations about future profits. 
A)  the real interest rate r. 
B)  changes in investors' expectations about future output growth. 
C)  changes in households' expectations about future risk. 
D)  changes in investors' expectations about future profits.

If the Federal Reserve wants to increase interest rates, it can

From 1992 until the end of the decade, the US economy

The major determinant of the term premium is

The slope of the investment function

The intercept of the IS curve depends on each of the following except

During the 1990s,

During 2002 and 2003, the US economy

The slope of the IS curve depends on each of the following except

Each of the following is a source of fluctuations in investment spending except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 10: Investment, Net Exports, and Interest Rates: The Is Curve

If the Federal Reserve wants to increase interest rates, it can

From 1992 until the end of the decade, the US economy

The major determinant of the term premium is

The slope of the investment function

The intercept of the IS curve depends on each of the following except

During the 1990s,

During 2002 and 2003, the US economy

The slope of the IS curve depends on each of the following except

Each of the following is a source of fluctuations in investment spending except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters