Sample test 2. Money, Banking and Financial Markets

Sample test 2. Money, Banking and Financial Markets 1) Bank reserves are a……of the Federal Reservei) Assetii) Liabilityiii) Reserveiv) Deficit2) The creation of new financial instruments has blurred the definition of money. This has implied that,relative to the past, now central banks focus onsh isar stued dvi y reaC souou rcrs eeH wer aso.comi) Broader monetary aggregates (such as M2 or M3)ii) Narrower monetary aggregates (such as M1)iii) Credit aggregatesiv) Exchange rates3) Unlike commodity money, fiat moneyi) Pays no interestsii) Is not publicly acceptediii) Has no intrinsic valueiv) Is issued by banks4) In Keynes an increase of the interest rate…..the price of bondsi)Increasesii) Reducesiii) Leaves unaffected5)In Baumol and Tobin theory a decrease of the interest induces people to withdraw money morei)Frequentlyii)Rarelyiii) IrregularlyTh6) In the neoclassical theory of investment the key variable for investment decisions isi) The shoe leather costii) The Tobin’s qiii) The marginal product of capitaliv) The discount rate7) When the inflation rate is positivei) Nominal GDP grows more than real GDPii) Nominal GDP grows less than real GDPiii) Nominal GDP grows as much as real GDP8)An increase in the cash/deposit ratioi)ii)iii)iv)Increases the money multiplierDecreases the money multiplierLeave the money multiplier unaffectedCould be any of i), ii), iii) The Fed prefers setting the discount rate rather than the amount of discount loans when the demandfor discount loansi)Is rigidii)Is flatiii)Is upward slopingiv)Is zero10) The demand for money in Friedman isMore rigid than in KeynesLess rigidThe sameCould be either less or more rigidsh isar stued dvi y reaC souou rcrs eeH wer aso.comi)ii)iii)iv)11) An increase in the interest rate is likely to ……………the voluntary reserves ofbanksi)ii)iii)iv)IncreaseDecreaseLeave unaffectedCould be any of i), ii), iii)12) Government bonds are………….the monetary aggregate M2Thi)ii)iii)iv) Powered by TCPDF ( fromIncluded inIncluded only if they are short term (3 or 6 months)Included only if they are long term (more than 6 months)

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