My Financial Theory Journey to Financial Freedom

26Apr/120

Please Need Help With Macroeconomics Final?

1. The U.S. has limits on Chinese textile imports. Such limits are an example of
A. a tariff
B. a quota
C. a regulatory trade restriction
2. Expansionary monetary policy tends to
A. lower the U.S. interest rate and increase the U.S. exchange rate
B. lower the U.S. interest rate and decrease the U.S. exchange rate
C. increase the U.S. interest rate and decrease the U.S. exchange rate
D. increase the U.S. interest rate and increase the U.S. exchange rate
3. In considering the net effect of expansionary fiscal policy on the trade deficit, the
A. income effect offsets the price effect
B. price effect offsets the income effect
C. income and price effects work in the same direction, so the trade deficit is decreased
D. income and price effects work in the same direction, so the trade deficit is increased
4. Expansionary fiscal policy tends to
A. raise U.S. income, increase U.S. imports, and increase the trade deficit
B. raise U.S. income, increase U.S. imports, and lower the trade deficit
C. lower U.S. income, reduce U.S. imports, and increase the trade deficit
D. lower U.S. income, reduce U.S. imports, and lower the trade deficit
5. The balance of trade measures the
A. difference between the value of imports and exports
B. share of U.S. imports coming from various regions of the world
C. share of U.S. exports going to various regions of the world
D. exchange rate needed to make imports equal exports
6. In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because
A. the country eventually will consume more and produce less
B. the country eventually will sell all its financial assets to foreigners
C. the domestic currency will appreciate
D. the country eventually has to produce more than it consumes in order to pay foreigners their profits
7. A weaker dollar
A. raises inflation and contracts the economy.
B. reduces inflation and contracts the economy
C. raises inflation and expands the economy
D. reduces inflation and expands the economy
8. If the Federal Reserve increases the required reserves, financial institutions will likely lend out
A. more than before, increasing the money supply
B. less than before, decreasing the money supply
C. more than before, decreasing the money supply
D. less than before, increasing the money supply
9. Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should
A. reduce the discount rate by 3 percentage points
B. reduce the discount rate by 10 percentage points
C. raise the discount rate by 3 percentage points
D. raise the discount rate by 10 percentage points
10. If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely
A. increase both the money multiplier and the money supply
B. increase the money multiplier but decrease the money supply
C. decrease the money multiplier but increase the money supply
D. decrease both the money multiplier and the money supply
11. A country can have a trade deficit as long as it can
A. purchase foreign assets
B. make loans to other countries
C. borrow from or sell assets to foreigners
D. produce more than it consumes.

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