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The money multiplier

ECO 320 week 4 Quiz ECO 320 week 4 Quiz 1. The money multiplier is equal to: (Points : 1) C * R. R + M1. one divided by the reserve requirement. one divided by R. 2. Which of the following is included in M2? (Points : 1) Treasury bills commercial paper saving accounts bonds 3. The monetary base is equal to: (Points : 1) C + R. C + money-market mutual funds. 1 divided by the reserve requirement. M1 + M2. 4. The total quantity of currency plus demand deposits is called: (Points : 1) M1. M2. the monetary base. broad money. 5. Which of the following is not one of the components of M1 in the U.S.? (Points : 1) coins paper currency currency gold 6. If a basket of goods and services costing $100 in the U.S. costs 20,000 yen in Japan, then the purchasing power parity exchange rate is _____ per dollar. (Points : 1) 50 yen 100 yen 150 yen 200 yen 7. The real exchange rate is: (Points : 1) the nominal exchange rate minus inflation. the nominal exchange rate adjusted for changes in the price level in the two countries. the nominal exchange rate minus its base value. the nominal exchange rate plus inflation. 8. The law of one price should hold well for: (Points : 1) differentiated products. real estate. haircuts. homogeneous products. 9. In general, trade flows between countries respond to: (Points : 1) changes in the nominal exchange rate. changes in the real exchange rate. changes in interest rates. changes in the real rate of interest. 10. Relative purchasing power parity means that: (Points : 1) the exchange rate between any two currencies is equal to the ratio of their price indexes. relative prices determine interest rates. the same good sells for the same price internationally. the percentage change in the exchange rate is equal to the inflation differential between the domestic and foreign currencies. 11. The income elasticity of the demand for exports: (Points : 1) measures the percentage change in exports relative to a percentage change in domestic income. measures the percentage change in domestic income relative to a percentage change in exports. measures the percentage change in exports relative to a percentage change in foreign income. measures the percentage change in foreign income relative to a percentage change in exports. 12. The wealth effect is defined as: (Points : 1) an accumulation of money is the hands of a few individuals. the effect of the wealth of a country. the effect of changes in the price level on the value of peopleÂ’s wealth. the effect of changes in the exchange rate on the value of peopleÂ’s wealth. 13. Everything else equal, an increase in consumption by the public would tend to cause: (Points : 1) a leftward shift in AD. a fall in the price level. a decrease in GDP. a rightward shift of AD. 14. The relationship between the total quantity of goods and services all sectors of the economy demand and the price level is known as: (Points : 1) aggregate supply. GDP. the consumer price index. aggregate demand. 15. An exchange rate shock is defined as: (Points : 1) a large and quick appreciation of a countryÂ’s currency. a large and slow appreciation of a countryÂ’s currency. a large and quick depreciation of a countryÂ’s currency. a large and slow depreciation of a countryÂ’s currency. 16. The balance between inflows and outflows in the current account is known as: (Points : 1) internal balance. external balance. macroeconomic balance. the Phillips curve. 17. The levels of inflation and unemployment that fit the preferences of a countryÂ’s citizens is known as: (Points : 1) microeconomic balance. full employment balance. the natural rate of unemployment. internal balance. 18. Fiscal policy refers to government changing: (Points : 1) its spending. interest rates. the money supply. its quotas. 19. When the government employs a combination of higher taxes and lower spending, this type of policy is called a: (Points : 1) contractionary fiscal policy. contractionary trade policy. contractionary monetary policy. contractionary exchange rate policy. 20. A contractionary fiscal policy: (Points : 1) lowers the federal budget deficit and increases domestic interest rates. increases the federal budget deficit and increases domestic interest rates. lowers the federal budget deficit and decreases domestic interest rates. increases the federal budget deficit and decreases domestic interest rates

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