Question 1

M2 is also referred to as which of the following?

Accepted Answer

A) currency 
B) narrow money 
C) near money 
D) high powered money 
E) none of the above 
A) currency 
B) narrow money 
C) near money 
D) high powered money 
E) none of the above

Question 2

Briefly discuss the organization of the Federal Reserve.Include in your answer a discussion of the individuals / groups who make decisions about monetary policy.

Accepted Answer

In terms of the structure of the Fed,ans

Question 3

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π  un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 4

What are the lessons from the crisis for monetary policy?

Accepted Answer

Liquidity trap has led a number of count

Question 5

To deal with dangerous behavior in the financial system,macro prudential tools can be used to aim directly at

Accepted Answer

A) borrowers. 
B) lenders. 
C) banks and other financial institutions. 
D) none of the above 
E) all of the above 
A) borrowers. 
B) lenders. 
C) banks and other financial institutions. 
D) none of the above 
E) all of the above

Question 6

The discount rate represents the interest rate on

Accepted Answer

A) overnight loans between banks. 
B) three-month U.S.securities. 
C) municipal bonds. 
D) one-year discount bonds. 
E) none of the above 
A) overnight loans between banks. 
B) three-month U.S.securities. 
C) municipal bonds. 
D) one-year discount bonds. 
E) none of the above

Question 7

From 2000 to 2007,which country had the highest nominal house price increase?

Accepted Answer

A) Spain 
B) Portugal 
C) Greece 
D) Italy 
A) Spain 
B) Portugal 
C) Greece 
D) Italy

Question 8

Explain the costs imposed by an increase in inflation.

Accepted Answer

The answers to this question s

Question 9

Which of the following is an example of the "shoe-leather costs" of inflation?

Accepted Answer

A) a rise in the cost of primary raw materials,like leather for shoes 
B) an artificial rise in the capital gains tax 
C) the need to take more trips to the bank 
D) miscalculations due to money illusion 
E) All of the above 
A) a rise in the cost of primary raw materials,like leather for shoes 
B) an artificial rise in the capital gains tax 
C) the need to take more trips to the bank 
D) miscalculations due to money illusion 
E) All of the above

Question 10

Each governor of the Federal Reserve is

Accepted Answer

A) appointed by the President to a 4-year term. 
B) appointed by the President to a 14-year term. 
C) appointed by the President for life. 
D) elected by the Presidents of banks and savings institutions. 
A) appointed by the President to a 4-year term. 
B) appointed by the President to a 14-year term. 
C) appointed by the President for life. 
D) elected by the Presidents of banks and savings institutions.

Question 11

Monetary policy has medium-run effects on which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) the level of output AND the price level 
E) none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) the level of output AND the price level 
E) none of the above

Question 12

Explain what role money illusion plays in determining the Fed's ability to affect output in the short run.

Accepted Answer

Money illusion refers to a situation whe

Question 13

Discuss the relationships among the various monetary aggregates.

Accepted Answer

Answers will include

Question 14

When the Fed wants to signal the public about the direction of monetary policy,it will likely use

Accepted Answer

A) a change in the discount rate. 
B) open market operations. 
C) a change in the reserve requirement. 
D) a public announcement about a change in the targeted federal funds rate. 
E) all of the above 
A) a change in the discount rate. 
B) open market operations. 
C) a change in the reserve requirement. 
D) a public announcement about a change in the targeted federal funds rate. 
E) all of the above

Question 15

The existence of inflation does which of the following?

Accepted Answer

A) reduces tax distortions 
B) allows governments to benefit from seignorage 
C) reduces shoe-leather costs 
D) reduces the costs associated with money illusion 
A) reduces tax distortions 
B) allows governments to benefit from seignorage 
C) reduces shoe-leather costs 
D) reduces the costs associated with money illusion

Question 16

Explain the macroeconomic effects of changes in monetary policy in: (1)the short run; and (2)the medium run.

Accepted Answer

The answers can vary (not to mention be

Question 17

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u = un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 18

Which of the following is a function of money?

Accepted Answer

A) medium of exchange 
B) provides protection from inflation 
C) it is a flow variable 
D) all of the above 
E) none of the above 
A) medium of exchange 
B) provides protection from inflation 
C) it is a flow variable 
D) all of the above 
E) none of the above

Question 19

Discuss and explain each of the instruments of monetary policy.

Accepted Answer

The instruments are:

Question 20

Suppose the annual inflation rate is 10%,and an asset bought at the beginning of the year for $100,000 is sold for $115,000.If the capital-gains tax rate is 30%,what is the (approximate)effective tax rate on the sale of this asset?

Accepted Answer

A) 10% 
B) 20% 
C) 25% 
D) 30% 
E) 4% 
A) 10% 
B) 20% 
C) 25% 
D) 30% 
E) 4%

Exam 24: Monetary Policy: a Summing up

M2 is also referred to as which of the following?

Briefly discuss the organization of the Federal Reserve.Include in your answer a discussion of the individuals / groups who make decisions about monetary policy.

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π < π?* and u > un.Given this information,we would expect that the Fed will

What are the lessons from the crisis for monetary policy?

To deal with dangerous behavior in the financial system,macro prudential tools can be used to aim directly at

The discount rate represents the interest rate on

From 2000 to 2007,which country had the highest nominal house price increase?

Explain the costs imposed by an increase in inflation.

Which of the following is an example of the "shoe-leather costs" of inflation?

Each governor of the Federal Reserve is

Monetary policy has medium-run effects on which of the following?

Explain what role money illusion plays in determining the Fed's ability to affect output in the short run.

Discuss the relationships among the various monetary aggregates.

When the Fed wants to signal the public about the direction of monetary policy,it will likely use

The existence of inflation does which of the following?

Explain the macroeconomic effects of changes in monetary policy in: (1)the short run; and (2)the medium run.

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u = un.Given this information,we would expect that the Fed will

Which of the following is a function of money?

Discuss and explain each of the instruments of monetary policy.

Suppose the annual inflation rate is 10%,and an asset bought at the beginning of the year for $100,000 is sold for $115,000.If the capital-gains tax rate is 30%,what is the (approximate)effective tax rate on the sale of this asset?

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

The Labor Market

Putting All Markets Togetherthe As-Ad Model

The Phillips Curve,the Natural Rate of Unemployment,and Inflation

The Crisis

The Facts of Growth

Saving,capital Accumulation,and Output

Technological Progress and Growth

Technological Progress: the Short,the Medium,and the Long Run

Expectations: the Basic Tools

Financial Markets and Expectations

Expectations,consumption,and Investment

Expectations,output,and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output,the Interest Rate,and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Fiscal Policy: a Summing up

Epilogue: the Story of Macroeconomics

an Introduction to National Income and Product Accounts

an Introduction to Econometrics

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