BANKING 302 The Taylor Rule is used by a central bank that is targeting

Question 1 (1 point)The Taylor Rule is used by a central bank that is targetingQuestion 1 options:monetary aggregates.a short term interest rate.bank reserves.none of the above.SaveQuestion 2 (1 point)Which of the following affects the exchange rate in the short run?Question 2 options:expected relative price levelforeign interest rateexpected future exchange rateall of the aboveSaveQuestion 3 (1 point)If a central bank is following a policy of fixing an interest rate at a constant value, then, if the economy expands, the bank will respond byQuestion 3 options:shifting the demand for money to the left.shifting the demand for money to the right.shifting the supply of money to the left.shifting the supply of money to the right.SaveQuestion 4 (1 point)An increase in a country’s trade barriers will cause the _____ for its currency to shift to theQuestion 4 options:demand, left.demand, right.supply, left.supply, right.SaveQuestion 5 (1 point)Which of the following factors affects the exchange rate in the short run but not the long run?Question 5 options:domestic interest raterelative expected trade barriersrelative import demandThey all affect the short and long run exchange rate.SaveQuestion 6 (1 point)A central bank would increase interest rates toQuestion 6 options:lower inflation.raise employment.stimulate the economy.all of the above.SaveQuestion 7 (1 point)If the euro/dollar exchange rate is 1.20 euro/dollar, and an American washing machine costs $250, assuming no trade barriers or transportation costs, what is the euro price of the washing machine?Question 7 options:200e250e300enone of the aboveSaveQuestion 8 (1 point)The adoption of inflation targeting has often led to problems in theQuestion 8 options:short run.long run.both of the above.neither of the above.SaveQuestion 9 (1 point)If the exchange rate betweent the euro and the dollar is currently 1 to 1 and from the perspective of the dollar the exchange rate appreciates by 25% how much does the euro depreciate by?Question 9 options:20%25%30%none of the aboveSaveQuestion 10 (1 point)The advantage of having a strong currency is itQuestion 10 options:makes imports more expensive.makes exports more expensive.makes interest rates lower.none of the above.SaveQuestion 11 (1 point)When monetary policymakers are unable to solve the time consistency problem, the primary result isQuestion 11 options:low growth.high unemployment.high inflation.none of the above.SaveQuestion 12 (1 point)A rise in the real interest rate in a country causes its currency toQuestion 12 options:appreciate.depreciate.remain unchanged.cannot be determined.SaveQuestion 13 (1 point)A central bank would lower interest rates toQuestion 13 options:decrease inflation.raise unemployment.stimulate GDP growth.all of the above.SaveQuestion 14 (1 point)The theory that in the long run exchange rates will reflect the prices within two countries or across countries is known as:Question 14 options:theory of one pricepurchasing power parityequilibrium exchange ratesnone of the aboveSaveQuestion 15 (1 point)Which of the following central bank policies would be pro-cyclical?Question 15 options:fixing an interest rate at a constant valuefixing the money supply at a constant valueinflation targetingnone of the aboveSaveQuestion 16 (1 point)Fears of _____ could cause a domestic currency to depreciate.Question 16 options:a stock market crasheasy monetary policygovernment bond defaultall of the aboveSaveQuestion 17 (1 point)According to the Taylor Rule, if the output gap rises by 2% and inflation rises by 1%, when inflation is 4% currentyl and the real equilibrium federal funds rate is 0.5% what is the target federal funds rateQuestion 17 options:7.50%6.00%3.00%3.50%SaveQuestion 18 (1 point)The law of one price would apply to which of the following goods or services sold in Japan and Australia?Question 18 options:office buildingauto repairmanicurenone of the aboveSaveQuestion 19 (1 point)If the foreign interest rate is 15%, the current exchange rate is 10.0 and the expected future exchange rate is 11.0, what is the domestic interest rate according to the interest parity condition?Question 19 options:5%14%25%none of the aboveSaveQuestion 20 (1 point)A central bank would decrease the money supply toQuestion 20 options:lower inflation.lower employment.lower GDP growth.all of the above.

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