6. What is the equilibrium interest rate? A. 2% B. 3% C. 1% D. 4% 7. What is the
ID: 3917639 • Letter: 6
Question
6. What is the equilibrium interest rate?
A. 2%
B. 3%
C. 1%
D. 4%
7. What is the equilibrium money supply?
A. $3 trillion
B. $2 trillion
C. $1 trillion
D. $4 trillion
8. Assume demand for money increased by $1T at all levels (a uniform shift to the right), the money supply would be
A. $3 trillion
B. $2 trillion
C. $1 trillion
D. $4 trillion
Assume demand for money increased by $1T at all levels (a uniform shift to the right), the interest rate would be
A. 2%
B. 3%
C. 1%
D. 4%
10. If the Federal Reserve reduces the reserve requirement ratio from 10% to 8%, the money multiplier would change
A. From 10 to 8
B. From 10 to 12.5
C. From 8 to 10
D. It would not change
11. If the Federal Reserve reduces the reserve requirement ratio from 10% to 8%; all of the banks’ reserves total $20 trillion; and none of it is excess reserves (i.e., available to loan out) before the change, then the amount of excess reserves after the change would be
A. Zero
B. $20 trillion
C. $2 trillion
D. $4 trillion
12. Given your answers to Q10 and Q11 above, how much money could be created by the reduction in the reserve requirement ratio?
A. Zero
B. $20 trillion
C. $10 trillion
D. $50 trillion
13. Which policy would not be considered an expansionary policy?
A. Lowering the Reserve Requirement Ratio
B. Buying Bonds
C. Selling Bonds
14. If the rate of U.S. Treasury notes were to rise suddenly, the dollar would likely
A. Depreciate
B. Appreciate
C. Not change
15. If confidence in the American economy were to fall dramatically, the dollar would likely
A. Depreciate
B. Appreciate
C. Not change
16. True/False: The American money supply has no effect on the dollar’s exchange rate.
17. Which economic school relies most heavily on “sticky prices” to explain the effects of Aggregate Demand on GDP?
A. Keynesian
B. Monetaris
t C. Rational Expectations
D. Coordination Failure
18. Which economic school most strongly advocates “discretionary” government policies?
A. Keynesian
B. Monetarist
C. Rational Expectations
D. Coordination Failure
19. Assume the United States has a cost comparative ratio of 1 ton of corn to 1 barrel of oil, and that Canada has a cost comparative ratio of 2 tons of corn to 5 barrels of oil. Which country has the comparative advantage in corn?
20. Given the information in Q19, which terms of trade would be acceptable to both countries?
A. 2 tons of corn to 1 barrel of oil
B. 2 tons of corn to 3 barrel of oil
C. 1 ton of corn to 2 barrels of oil
D. Both B and C
Explanation / Answer
Answer)
6) The equilibrium interest rate would depend on the inflation , demand and supply
Assuming the inflation rate , the equilibrium interest rate would be 3 %
7) $ 2 trilion
16) False
It also depends upon the american money supply.
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