MONEY AND BANKING (DAVIDSSON) FINAL EXAM QUESTIONS

MONEY AND BANKING - FINAL EXAM


Thereooareootwoootypesooofooopenoomarketoooperations:oo___________ooopenoomarketoo
operationsooareoointendedootooochangeootheoolevelooofooreservesooandootheoomonetaryoob
ase,ooandoo___________ooopenoomarketoooperationsooareoointendedootooooffsetoomovem
entsooinoootheroofactorsoothatooaffectootheoomonetaryoobase.
a)oodefensive;oodynamic
b)oodefensive;oostatic
c)oodynamic;oodefensive
d)oodynamic;oostaticoo-ooans--✔✔c)oodynamic;oodefensive

Theoogrossoodomesticooproductooisoothe:
a)ootheoovalueooofooalloowealthooinooanooeconomy.
b)ootheoovalueooofooalloogoodsooandooservicesoosoldootooootheroonationsooinooaooyear.
c)ootheoomarketoovalueooofooalloofinaloogoodsooandooservicesooproducedooinooanooeconom
yooinooaooyear.
d)ootheoomarketoovalueooofooalloointermediateoogoodsooandooservicesooproducedooinooanoo
economyooinooaooyear.oo-ooans--
✔✔c)ootheoomarketoovalueooofooalloofinaloogoodsooandooservicesooproducedooinooanooecon
omyooinooaooyear.

Whenootheoototaloovalueooofoofinaloogoodsooandooservicesooisoocalculatedoousingoocurrent
ooprices,ootheooresultingoomeasureoois:
a)oorealooGDP.
b)ootheooGDPoodeflator.
c)oonominalooGDP.
d)ootheooindexooofooleadingooindicators.oo-ooans--✔✔c)oonominalooGDP.

Ifooyouroonominalooincomeooinoo2016oowasoo$50,000,ooandoopricesoodoubledoobetweenoo
2016ooandoo2017,ootooohaveootheoosameoorealooincome,ooyouroonominalooincomeooinoo20
17oomustoobe:
a)oo$50,000.
b)oo$75,000.
c)oo$90,000.
d)oo$100,000.oo-ooans--✔✔d)oo$100,000.

Sustainedoodownwardoomovementsooinootheoobusinessoocycleooareooreferredootoooasoo__
________ooandoosustainedooupwardoomovementsooareooreferredootoooasoo___________.
a)ooexpansions;ooinflation
b)oorecessions;ooexpansions
c)ooexpansions;oorecessions

, d)ooexpansions;ooeconomicoorecoveriesoo-ooans--✔✔b)oorecessions;ooexpansions

Theoomanagementooofoomoneyooandoointerestooratesooisoocalledoo__________oopolicyooa
ndoodecisionsooaboutoogovernmentoospendingooandootaxationooisoocalledoo__________oo
policy.
a)oomonetary;oofiscal
b)oofiscal;oomonetary
c)oofiscal;oofinancial
d)oofinancial;oofiscaloo-ooans--✔✔a)oomonetary;oofiscal

Thereooisooaoo_________ooassociationoobetweenooinflationooandootheoogrowthoorateooofoo
moneyoo__________.
a)oopositive;oodemand
b)oopositive;oosupply
c)oonegative;oodemand
d)oonegative;oosupplyoo-ooans--✔✔b)oopositive;oosupply

Ifootheoocentraloobankoopursuesooaoomonetaryoopolicyoothatooisoomoreooexpansionaryootha
noowhatoofirmsooandoopeopleooexpect,oothenootheoocentraloobankoomustoobeootryingooto:
a)ooboostoooutputooinootheooshortoorun.
b)ooconstrainoooutputooinootheooshortoorun.
c)ooconstrainooprices.
d)ooboostoopricesooinootheooshortoorun.oo-ooans--
✔✔a)ooboostoooutputooinootheooshortoorun.

AccordingootoootheooTayloroorule,ootheooFedooshouldooraiseootheoofederaloofundsoointerest
oorateoowhenooinflationoo___________ootheooFed'sooinflationootargetoooroowhenoorealooGD
Poo_________ootheooFed'soooutputootarget.
a)oorisesooabove;oodropsoobelow
b)oodropsoobelow;oodropsoobelow
c)oorisesooabove;oorisesooabove
d)oodropsoobelow;oorisesooaboveoo-ooans--✔✔c)oorisesooabove;oorisesooabove

UsingooTaylor'soorule,oowhenootheooequilibriumoorealoofederaloofundsoorateooisoo2oopercen
t,ootheoopositiveoooutputoogapooisoo2oopercent,ootheootargetooinflationoorateooisoo1oopercent
,ooandootheooactualooinflationoorateooisoo2oopercent,ootheoonominaloofederaloofundsoorateoot
argetooshouldoobe:
a)oo5oopercent.
b)oo5.5oopercent.
c)oo6oopercent.
d)oo6.5oopercent.oo-ooans--✔✔d)oo5.5oopercent.

InooanooagreementootoooexchangeoodollarsooforooJapaneseooYenooinoothreeoomonthsooatoo
aoopriceooofoo110ooJPYooperoodollar,ootheoopriceoois:
a)oospotooexchangeoorate.
b)oomoneyooexchangeoorate.