Recent Question

Three quarters of all Americans worked on farms 1. “India, however, is strong in ways that are not always apparent. Although its savings rate is lower than China’s, it uses investment more efficiently to produce economic growth.” “Uses investment more efficiently” means that investment projects are chosen by a) the government b) the capital market c) the central bank d) foreigners 2. “A k ...

Other / Other 07 May 2016

We would expect more modest productivity gains 1. "The fact that economic performance strengthened as inflation subsided should not have been surprising, given that risk premiums and economic disincentives to ______ diminish as product prices become more stable." The blank is best filled with a) employ more people b) purchase consumer durables c) invest in productive capital d) undertake fiscal fine-tuning 2. "We should expect that ...

Other / Other 07 May 2016

What rate of growth of the money supply would you recommend 1. If "the" multiplier is 6, the income multiplier with respect to the money supply is 4, and the money multiplier is 5, then to increase income by $50 billion dollars the policy authorities could a) increase the money supply by $2.5 billion b) increase government spending by $10 billion c) increase both government spending and the money supply by $4 billion d) increase ...

Other / Other 07 May 2016

I really don't believe monetary policy is a very useful tool for fine-tuning the business cycle 1. "The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time." The advocates of monetarism wish it to be rigid in its application over all periods of time to a) weaken fiscal policy b) avoid monetary policy errors c) strengthen t ...

Other / Other 07 May 2016

Why would corporations want to achieve zero balances in their checking accounts "M1 can be a slippery commodity. The central bank admits to having significantly underestimated the transactions money flying around the system. One reason is that banks' bigger corporate customers cottoned onto the advantage of so managing their moneys as to achieve, at a consolidated, central checking account, practically zero balances. For the banks promoti ...

Other / Other 07 May 2016

The Federal government is piling up larger deficits than estimated in February 1. "A significant difference exists between the consequences of federal as opposed to state borrowing if the federal government borrows by selling bonds to the Federal Reserve. It alone can do so - the central bank buys only federal bonds." This significant difference is that state borrowing a) reduces taxes b) reduces unemployment c) doesn't have to be rep ...

Other / Other 07 May 2016

Monetizing the debt means that the Federal Reserve is not seeking buyers for all the government 1. "If I ask a worker to get me a spare part for my car, he'll refuse to do it for money, but will do it for vodka." This phenomenon is happening in Russia because of a very high a) tax rate b) inflation rate c) alcoholism rate d) unemployment rate 2. "Monetizing the debt means that the Federal Reserve is not seeking buyers for all the gove ...

Other / Other 07 May 2016

Economists at the seminar agreed that the U.S. deficit 1. "One question is whether the government can steel itself to bring its fiscal policy into line with the central bank's monetary policy. Will the government be able to borrow the funds it will need to cover this year's deficit out of the existing money supply, which the Fed is trying to restrict?" If the government tries to borrow more funds than are available there will be a rise in ...

Other / Other 07 May 2016

The survey of global labour market trends from the Geneva-based International Labour Organisation 1. "Budget deficits are sometimes useful to spur consumption and thus encourage investment in business plant and equipment, but more generally they discourage rather than encourage investment because they ....." This clipping is best completed with a) create inflation b) raise interest rates c) lower interest rates d) decrease aggregate d ...

Other / Other 07 May 2016

The impact on this monetary aggregate of extensive financial innovation "The deficit will mainly be financed by selling bonds to the general public and not to the central bank." 1. What happens to the money supply if the deficit is financed by selling bonds to the general public? a) the money supply increases b) the money supply decreases c) the money supply is unaffected d) we cannot tell what will happen to the money supply 2. ...

Other / Other 07 May 2016