Question

30. The main point of Frederic Bastiat's satire is that:

A. French candle makers would benefit from government restrictions on trade

B. French soybean farmers would benefit from a tariff on U.S. soybeans

C. The arguments in favor of trade protectionism are sometimes ridiculous

D. The arguments in favor of trade protectionism are sometimes well-intended.

31. People demand some money for precautionary reasons mostly because they are:

a. reacting to government policies.

b. risk averse

c. not worried about future uncertainty.

d. concerned about future interest rates.

e. all of the above.

32. If an economy is experiencing recession, the FED should:

a. raise the discount rate.

b. buy government bonds.

c. sell government bonds

d. raise the reserve ratio

e. raise margin requirements

33. If an economy is experiencing inflation, the FED should:

a. raise the discount rate

b. lower the reserve ratio

c. buy government bonds

d. all of the above

e. none of the above

34. FED policy is intended to have an initial short run impact on:

a. Aggregate Supply.

b. Aggregate Demand.

c. Government Purchases.

d. Consumption.

e. all of the above.

35. Which of the following would lead to an increase in the transactions demand for money?

a. an increase in the rate of return on stocks and other financial assets.

b. a reduction in the real interest rate.

c. an increase in the government’s national debt.

d. an increase in consumers’ incomes.

e. all of the above.

36. Which of the following is a relevant question today about the Fed?

a. Should it be audited?

b. Who owns it?

c. Is it still relevant?

d. All of the above

37. If the reserve ratio is 5 percent, the simple money multiplier is:

a. 5

b. 10

c. 15

d. 20

e. 25

38. Use the correct answer from question 37 above to determine how much the money supply could

change if the Fed buys $1,000 in government bonds.

a. It will increase by 20,000

b. It will increase by 25,000

c. It will decrease by 10,000

d. It will decrease by 20,000

e. None of the above.

39. The asset demand for money is a function of:

a. income.

b. government transfer payments.

c. anticipated emergencies.

d. FED monetary policy.

e. the prevailing interest rate.

40. The new tariffs on aluminum and steel imposed by the Trump Administration are based on which argument for protection:

a. the infant industry argument

b. the military self sufficiency argument

c. the cheap labor argument

d. the dumping argument

e. any of the above could be correct