51.The Fed is conducting expansionary monetary policy if it:
A increases the discount rate, buys bonds, and sets a lower target for the federal funds rate.
B decreases the discount rate and sells bonds.
C sets a lower target for the federal funds rate and buys bonds in the open market.
D increases reserve requirements and buys bonds in the open market.
E buys bonds in the open market and raises the discount rate.
52.If banks become concerned about future conditions and decide to hold larger excess reserves, which of the following is a likely result?
A A rise in interest rates
B An increase in bond prices
C An increase in aggregate demand
D An increase in the money supply
E Both C and D
53.The Fed is under no obligation to coordinate its actions with fiscal policy. And in fact, the Fed may take actions specifically designed to counteract some piece of fiscal policy. An example of fiscal and monetary policies with opposite effects is:
A an increase in taxes and increased sales of bonds by the Fed.
B a decrease in government spending and an increase in the discount rate.
C a decrease in taxes and a decrease in the target for the federal funds rate.
D an increase in government spending and an increase in reserve requirements.
E a decrease in taxes and increased purchases of bonds by the Fed.
54.In the fictitious nation of Zagora, a worker can produce either 5 books or 10 televisions in an hour. In neighboring Plovdiv, a worker can produce either 3 books or 5 televisions in an hour. Which statement about this situation is true?
A Zagora has comparative advantage in the production of books.
B Zagora has comparative advantage in the production of televisions.
C Workers in Plovdiv can’t possibly compete against the super-productive workers in Zagora.
D Workers in Zagora can’t be expected to compete against the low-wage workers in Plovdiv.
E None of the above
55.Given the U.S. has a current account deficit, a large increase in the demand for U.S. computer programs among Japanese residents will have all the following effects except:
A an increase in the exchange rate, expressed in yen per dollar.
B an increase in the U.S. capital account surplus.
C an increase in investment in Japan.
D an decrease in the U.S. trade deficit.
E It may have all the above effects.
56.Fiscal policy affects exchange rates because:
A as government spending increases, the government must buy more and more goods and services from foreign countries.
B as government debt increases, interest rates rise, and the value of the currency rises.
C as government debt increases, interest rates rise, and the value of the currency falls.
D as the money supply increases, interest rates fall, and the value of the currency rises.
E as the money supply increases, interest rates fall, and the value of the currency falls.
57.There are many kinds of trade restrictions, and trade restrictions are put into place for many reasons. Which of the following is not a reason to use trade restrictions?
A To save natural habitats from over-use
B To protect the jobs of workers in certain industries
C To make a political statement regarding the labor policies of another nation
D To compensate for higher taxes placed on domestic producers
E To create a lower prices for domestic consumers
58.If the value of the U.S. dollar in foreign exchange markets rises:
A U.S. exports will become relatively less expensive.
B capital inflows into the United States will increase.
C people in the U.S. will purchase fewer imports.
D U.S. exports will likely decrease.
E All of the above
59.Saying that leakages equal injections give the equation:
A T + S + X = G + I + M
B Y = C + S + T
C Y = C + I + G + X - M
D T + S + M = C + G + I + X
E T + S + M = G + I + X
