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Econ Final Fall 2018

Terms in this set (39)

Which of the following is a popular type of financial investment.
Mutual funds
The Federal Reserve System performs many functions but its most important one is:
Controlling the money supply
By volume, which of the following nations is NOT currently one of the top 3 trading partners with the U.S.?
Germany
Assume Econville and Socburg have identical populations, but differ in terms of their productive capacities over food and clothing. Econville can produce 20 units of food and 10 units of clothing each day. Which is the true statement?
Econville has the comparative advantage in producing food.
The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:
Setting the Fed's monetary policy and directing the purchase and sale of government securities.
Economic Trade Theory suggests that countries should generally ______ goods for which they hold a comparative advantage and ______ goods for which they do not hold a comparative advantage.
Export, Import
Wanda purchased a non-maturing bond for $10,000 that pays out semi-annual coupons at a rate of $350 each payout. Her annual expected rate of return on the bond is:
7%
By volume, which of the following nations is NOT currently one of the top 3 overall world exporters?
Canada
Which of the following countries exports the least, when measured as a fraction of overall GDP?
United States
Which of the following Fed actions increases the U.S. money supply?
Lower the reserve ratio
Terri invests $200,000 in an asset that she believes carries little to no risk, and that she expects it will provide an annual rate of return of 5% each year. if Terri is right, in 5 years her assets will be worth:
$255,256
If the purchasing power of the dollar is failing then we know that:
The price index is rising
Members of the Federal Reserve of Governors are:
Appointed by the President to staggered 14-year terms
The use of tariffs and quotas for trade protection results in:
Less overall efficiency in the global economy
If the Board of governors of the Federal Reserve System decides to sell off some of their holdings of securities to commercial U.S. Banks , this decision will:
Decrease the excess reserves of member banks and thus decrease the money supply
which of the following topics refers to the reason tariffs are common but quotas are not?
Government Tax Revenues
Equal shares of a companies profit are paid out to stockholders as:
Dividends
What "backs" the money supply of the U.S.?
The fact that the intrinsic value of coins in circulation is greater than their face value
If the required reserve ratio were 15 percent, the value of the monetary multiplier would
6.67
The M1 definition of the money supply does NOT include which of the following?
money market investment accounts help by individuals
Which of the following is a likely result of a country imposing tariffs on automobiles?
An increase in the price of automobiles in the foreign/producing country
If stockholders sell their shares for more than they paid for those shares, the Stockholders:
Realize a capital gain
Investments that are designed to match exactly the performance of a group of stocks like the Dow Jones Industrial Average or the S&P-500 are called:
Index Funds
Using the Taylor Rule, for each 1% increase in the inflation rate above its 2% target, the Fed should:
increase the real federal funds rate by .5%
The federal funds rate is the rate the U.S. banks pay for loans from:
Other Banks
A mutual fund company uses the funds of its investors to:
Buy stocks and bonds
If the U.S. government passes legislation limiting the number of automobiles that can be imported into the U.S., capping that number at 300,000 cards per year, they have adopted a(n):
Quota
When people withdraw money from their deposits in the banking system, the:
Excess reserves of the banking system will decrease
Which of the following "backs" the value of money in the United States?
The acceptability of it as a medium of exchange
Open-market operations and adjustments to the discount are ______ tools of monetary policy that are used _______, whereas changes in the required reserve ratio is a relatively _____ tool of monetary policy that is used ________.
important, frequently, unimportant, infrequently
If a nation agrees to limit the quantity of a product that it exports to another, it has adopted:
A voluntary exports restrictions
If the Fed (Central Bank) buys government securities from commercial banks in the open market:
Commercial banks give the securities to the Fed, and the Fed increases bank's reserves
An excise tax that is applied to an imported product, but not to products produced domestically, is a(n):
Tariff
Burt bought a house for $200,000 and then rents it out for $1,500 per month. His expected annual rate of return from renting the house is approximately:
9%
Assume that there are two investments similar in all respects, including the risk associated with the likely payoff, but that investment X carries a higher rate of return than does investment Y. As a result of the arbitrage process, the price of investment in:
Y will rise and its rate of return will fall
The limited liability rule means that if a corporation goes bankrupt:
Shareholders can only lose the amount they invested
Which of the following is a feature of all investments?
The future payments earned, or value of the asset itself, carries uncertainty
If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be:
4
Alma recently purchased a Mexican restaurant for $450,000 from which expects to earn a monthly profit of $1,500. Her expected annual rate of return is:
4%
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