quiz 5 Fin 385 June 2015

Question 11 pts

Which of the following is not an indicator of inflation?

[removed]	oil prices
[removed]	consumer confidence surveys

[removed]	wage rates
[removed]	housing price indexes

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Question 21 pts

The ____ indicators tend to occur after a business cycle.

[removed]	coincident
[removed]	none of the above

[removed]	leading
[removed]	lagging

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Question 31 pts

A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates.

[removed]	downward; downward
[removed]	upward; downward

[removed]	downward; upward
[removed]	upward; upward

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Question 41 pts

Costner National, a commercial bank, obtains short-term deposits and makes long-term fixed-rate loans. It should be adversely affected when the Fed:

[removed]	monetizes the debt.
[removed]	uses a tight-money policy.

[removed]	uses a loose-money policy.
[removed]	maintains a stable money supply.

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Question 51 pts

According to the theory of rational expectations, ____ inflationary expectations encourage businesses and households to ____ their demand for loanable funds in order to borrow and make planned expenditures increase.

[removed]	higher; increase
[removed]	lower; increase

[removed]	lower; reduce
[removed]	higher; reduce

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Question 61 pts

Inflation is commonly the result of a

[removed]	large budget deficit.
[removed]	high level of interest rates.

[removed]	high level of unemployment.
[removed]	high level of aggregate demand.

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Question 71 pts

When the Fed uses open market operations by selling some of its Treasury securities to investors in the U.S., there will be

[removed]	an outward shift in the demand schedule for loanable funds.
[removed]	an outward shift in the supply schedule of loanable funds.

[removed]	an inward shift in the supply schedule of loanable funds.
[removed]	no shift in the supply schedule of loanable funds.

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Question 81 pts

Financial institutions such as commercial banks, bond mutual funds, insurance companies, and pension funds maintain large portfolios of bonds, so their portfolio is ____ affected when the Fed ____ interest rates.

[removed]	Answer A and C are correct.
[removed]	unfavorably; decreases

[removed]	favorably; increases
[removed]	unfavorably; increases

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Question 91 pts

In general, there is:

[removed]	an inverse relationship between unemployment and inflation.
[removed]	a positive relationship between GNP and unemployment.

[removed]	a positive relationship between unemployment and inflation.
[removed]	an inverse relationship between GNP and inflation.

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Question 101 pts

A ____-money policy can reduce unemployment, and a ____-money policy can reduce inflation.

[removed]	loose; tight
[removed]	loose; loose

[removed]	tight; tight
[removed]	tight; loose

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