Question Details

If firms paying employees monthly began paying 


1. If firms paying employees monthly began paying them weekly, then the demand for money would 
a) rise and income would rise b) rise and income would fall 
c) fall and income would rise d) fall and income would fall 
2. The quantity of money demanded varies 
a) directly with both prices and output b) inversely with both prices and output 
c) directly with prices and inversely with output 
d) inversely with prices and directly with output 
3. "Jobs increased at a healthy pace last month, the unemployment rate fell and the manufacturing sector stayed strong. As a result, most analysts think that when the Fed meets later this month it will _____ short-term interest rates in an effort to ____ economic growth and avoid _____." The blanks are best filled with 
a) lower; spur; layoffs b) raise; slow; inflation 
c) lower; spur; inflation d) raise; slow; layoffs 
4. "The Fed has been criticized for raising interest rates before seeing any evidence of worsening inflation, but Fed chairman Alan Greenspan replied that "To successfully navigate a bend in the river, the barge must begin the turn well before the bend is reached," introducing a new monetary-policy metaphor." This policy action is 
a) contractionary, reflecting policy rules b) contractionary, reflecting policy discretion 
c) expansionary, reflecing policy rules d) expansionary, reflecting policy discretion 
5. "A small but vocal clique of Japanese politicians has floated the idea that the Bank of Japan might purchase government bonds directly from the Ministry of Finance as a way to fund the government's rapidly expanding deficit. The plan, which would essentially have the central bank printing money to finance government spending, is opposed by the Bank of Japan." The Bank of Japan opposes this because it 
a) is an inflationary policy b) does not want to take responsibility for fiscal policy 
c) is an excessively expensive way to finance the deficit
d) would prefer to focus monetary policy on fixing the interest rate




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