ECO 302 Week 7 Quiz

8/20/2019 ECO 302 Week 7 Quiz

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ECO 302 Week 7 Quiz – Strayer

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!. "i#h p$%ered $ney i& '$$dity $ney (ike #$(d and &i()er.

2. *+ h$u&eh$(d& redu'e $ney ba(an'e&, then their tran&a'ti$n& '$&t& #$up.

3. *+ the $ney &upp(y #r$%& +a&ter than $ney deand, then the pri'e(e)e( ri&e&.

4. *+ the intere&t rate in'rea&e&, then the rea( deand +$r $ney a(&$in'rea&e&.

5. he neutra(ity $+ $ney ean& that $ne tie 'han#e& in the $ney&upp(y d$ n$t a++e't rea( )ariab(e&.

. ! in'(ude& a br$ader array $+ dep$&it a''$unt& than 2 d$e&.

7. *n the arr$ $de(, $ney and barter 'an b$th be u&ed +$r e1'han#e&.

. *n the arr$ $de(, h$u&eh$(d& h$(d $ney a& a ($n#-ter &t$re $+)a(ue.

. *+ the pri'e (e)e( d$ub(e&, then a h$u&eh$(d& n$ina( deand +$r

$ney a(&$ d$ub(e&.

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8/20/2019 ECO 302 Week 7 Quiz


!0. *+ the n$ina( uantity $+ $ney &upp(ied d$e& n$t )ary, then the pri'e(e)e( %i(( be '$unter'y'(i'a(.

%)LT,PLE C-O,CE

!. 6iat $ney i& $ney that ha& )a(ue be'au&e $+:a. it& intrin&i' )a(ue. '. #$)ernent de'ree.

b. it i& a '$$dity. d. a(( $+ the ab$)e.

2. C$$dity $ney i& $ney that ha& )a(ue be'au&e:a. $+ the intrin&i' )a(ue $+ the '$$dity. '. the #$)ernent &ay& &$.

b. it i& (e#a( tender. d. a(( $+ the ab$)e.

3. *+ a per&$n h$(d& $ne d$((ar and d$e& n$t ($&e it, then a& ($n# a& the per&$n h$(d& that d$((ar they %i(( ha)e:a. the '$$dity )a(ue $+ the d$((ar. '. an intere&t bearin# a&&et.

b. $ne d$((ar in 'urren'y.d. a(( $+ the ab$)e.

4. "i#h p$%ered $ney i&:a. $ney he(d by bu&ine&& +$r in)e&tent. '. t$ta( 'urren'y in'ir'u(ati$n.

b. t$ta( 'urren'y in 'ir'u(ati$n p(u& dep$&it$ry in&tituti$n& dep$&it& at the 6edera(e&er)e. d. #$)ernent b$nd& he(d by the pub(i' and dep$&it$ryin&tituti$n&.

5. 8 $netary a##re#ate i&:a. hi#h p$%ered $ney. '. $ney de+ined $re br$ad(y than 'urren'y.

b. '$$dity $ney. d. t$ta( 'urren'y in 'ir'u(ati$n p(u& dep$&it$ryin&tituti$n& dep$&it& at the 6edera( e&er)e.

. 9S ! $ney in'(ude&:

8/20/2019 ECO 302 Week 7 Quiz


a. 'urren'y he(d by the pub(i'. '. tra)e(er& 'he'k&. b. 'he'kab(e dep$&it&. d. a(( $+ the ab$)e.

7. 9S ! $ney in'(ude&:a. &a)in#& dep$&it&. '. tie dep$&it&.

b. 'he'kab(e dep$&it&. d. a(( $+ the ab$)e.

. 9S ! $ney in'(ude&:a. 'urren'y, tra)e(er& 'he'k& and 'he'kab(e dep$&it&. '. 'urren'y,'he'kab(e dep$&it&, &a)in#& dep$&it&.

b. 'he'kab(e dep$&it&, tra)e(er& 'he'k& and &a)in#& dep$&it&. d. 'urren'y,tie dep$&it&, 'he'kab(e dep$&it&.

. 9S 2 $ney in'(ude&:a. 'urren'y. '. &a(( tie dep$&it&.

b. deand dep$&it& d. a(( $+ the ab$)e.

!0. 9S 2 $ney in'(ude&:a. 'urren'y, tie dep$&it& #$)ernent b$nd&. '. 'he'kab(e dep$&it&,&a)in#& dep$&it&, &a(( tie dep$&it&.

b. &a)in#& dep$&it&, &a(( tie dep$&it&, pri)ate b$nd&. d. retai($ney arket utua( +und&, &a(( tie dep$&it&, #$)ernent b$nd&.

!!. $ney i& di++erent +r$ $ther a&&et& (ike 'apita( and b$nd& in that:a. $ney d$e& n$t pay intere&t. '. 'apita( and b$nd& are better ($n# ter&t$re& $+ )a(ue.

b. $ney 'an be &pent +$r pur'ha&e&. d. a(( $+ the ab$)e.

!2. $ney i& di++erent +r$ $ther a&&et& (ike 'apita( and b$nd& in that:a. $ney d$e& n$t pay intere&t. '. $ney i& a better ($n# ter &t$re $+

)a(ue. b. $ney ha& intrin&i' )a(ue. d. a(( $+ the ab$)e.

8/20/2019 ECO 302 Week 7 Quiz


!3. $ney i& di++erent +r$ $ther a&&et& (ike 'apita( and b$nd& in that:

a. $ney pay& a hi#her intere&t rate. '. $ney i& a better ($n# ter &t$re$+ )a(ue.

b. $ney 'an be &pent +$r pur'ha&e&. d. a(( $+ the ab$)e.

!4. $ney i& di++erent +r$ $ther a&&et& (ike 'apita( and b$nd& in that:a. $ney ha& intrin&i' )a(ue. '. 'apita( and b$nd& are better ($n# ter&t$re& $+ )a(ue.

b. $ney pay& a hi#her rate $+ intere&t. d. a(( $+ the ab$)e.

!5. When h$u&eh$(d& redu'e their a)era#e $ney ba(an'e&, theya. pur'ha&e $re #$$d&. '. in'ur $re $pp$rtunity '$&t&.

b. they earn (e&& intere&t. d. in'ur $re tran&a'ti$n '$&t&.

!. *+ a per&$n& in'$e d$ub(e& %e e1pe't their 'a&h h$(din# t$:a. d$ub(e.'. (e&& than d$ub(e.

b. $re than d$ub(e. d. de'(ine.

!7. E'$n$ie& $+ &'a(e in 'a&h ana#eent ean&:a. at a hi#her in'$e h$u&eh$(d& h$(d $re $ney a& a pr$p$rti$n $+ theirin'$e. '. the pr$p$rti$n $+ in'$e he(d i& n$t a++e'ted by h$u&eh$(d

in'$e. b. at ($%er in'$e& h$u&eh$(d& h$(d $re $ney a& a pr$p$rti$n $+ theirin'$ed. at ($%er in'$e h$u&eh$(d& h$(d (e&& $ney a& a pr$p$rti$n $+ theirin'$e.

!. ea( $ney deand d$e& n$t 'han#e %hen:a. n$ina( ;< 'han#e&. '. the pri'e (e)e( 'han#e&.

b. the intere&t rate 'han#e&. d. a(( $+ the ab$)e.

8/20/2019 ECO 302 Week 7 Quiz


!. 8$n# the &$ur'e $+ tran&a'ti$n& '$&t& a&&$'iated %ith redu'in#a)era#e $ney ba(an'e& are:a. br$kera#e +ee&. '. the tie &pent #$in# t$ the 8.

b. the tie &pent #$in# t$ the bank. d. a(( $+ the ab$)e.

20. 8$n# the &$ur'e& $+ tran&a'ti$n& '$&t& a&&$'iated %ith redu'in#a)era#e $ney ba(an'e& are:a. br$kera#e +ee&. '. +$re#$ne intere&t payent&.

b. $pp$rtunity '$&t&. d. a(( $+ the ab$)e.

2!. 8$n# the &$ur'e $+ tran&a'ti$n& '$&t& a&&$'iated %ith redu'in#a)era#e $ney ba(an'e& are:a. +$re#$ne intere&t payent&. '. $pp$rtunity '$&t&.

b. the tie &pent #$in# t$ the bank $r 8. d. a(( $+ the ab$)e.

22. he deand +$r $ney i&:a. ne#ati)e(y re(ated t$ the pri'e (e)e(. '. p$&iti)e(y re(ated t$ rea( ;<.

b. p$&iti)e(y re(ated t$ the intere&t rate. d. a(( $+ the ab$)e.

23. he deand +$r $ney i&:a. ne#ati)e(y re(ated t$ the pri'e (e)e(. '. ne#ati)e(y re(ated t$ rea( ;<.

b. ne#ati)e(y re(ated t$ the intere&t rate. d. a(( $+ the ab$)e.

24. he deand +$r $ney i&:a. p$&iti)e(y re(ated t$ the pri'e (e)e(. '. ne#ati)e(y re(ated t$ rea( ;<.

b. p$&iti)e(y re(ated t$ the intere&t rate. d. a(( $+ the ab$)e.

8/20/2019 ECO 302 Week 7 Quiz


25. he deand +$r $ney i&:a. p$&iti)e(y re(ated t$ the pri'e (e)e(. '. p$&iti)e(y re(ated t$ rea( ;<.

b. ne#ati)e(y re(ated t$ the intere&t rate. d. a(( $+ the ab$)e.

2. When the &upp(y $+ $ney in'rea&e&, thena. the pri'e (e)e( ri&e&. '. $ney deand in'rea&e&.

b. the pri'e (e)e( +a((&. d. $ney deand de'rea&e&.

27. When the deand $+ $ney in'rea&e&, then

a. the pri'e (e)e( ri&e&. '. the $ney &upp(y in'rea&e&. b. the pri'e (e)e( +a((&. d. the $ney &upp(y de'rea&e&.

6i#ure !0.!

2. *n 6i#ure !0.!, i+ $ney deand de'rea&e& then:a. the eui(ibriu pri'e (e)e( ri&e&. '. the $ney &upp(y ri&e&.

b. the eui(ibriu pri'e& (e)e( +a((&. d. the $ney &upp(y +a((&.

2. *n 6i#ure !0.!, i+ the $ney &upp(y de'rea&e& then:a. the eui(ibriu pri'e (e)e( ri&e&. '. $ney deand in'rea&e&.

b. the eui(ibriu pri'e (e)e( +a((&. d. $ney deand de'rea&e&.

30. *n 6i#ure !0.! i+ the intere&t rate, i, %ere t$ in'rea&e, thena. $ney deand de'rea&e& and the pri'e (e)e( in'rea&e&. '. the $ney&upp(y and the pri'e (e)e( %$u(d in'rea&e.

b. $ney deand in'rea&e& and the pri'e (e)e( de'rea&e&. d. the $ney&upp(y and the pri'e (e)e( %$u(d de'rea&e.

3!. *n 6i#ure !0.! i+ rea( ;<, =, %ere t$ in'rea&e, then

8/20/2019 ECO 302 Week 7 Quiz


a. $ney deand de'rea&e& and the pri'e (e)e( in'rea&e&. '. the $ney&upp(y and the pri'e (e)e( %$u(d in'rea&e.

b. $ney deand in'rea&e& and the pri'e (e)e( de'rea&e&. d. the $ney&upp(y and the pri'e (e)e( %$u(d de'rea&e.

32. *n 6i#ure !0.! the intera'ti$n $+ the $ney &upp(y and $ney deanddeterine&:a. rea( ;<. '. #r$%th rate $+ the e'$n$y.

b. the pri'e (e)e(. d. a(( $+ the ab$)e.

33. *n 6i#ure !0.! i+ $ney deand in'rea&e& +a&ter than the $ney&upp(y then:a. the pri'e (e)e( %i(( ri&e $)er tie. '. ;< %i(( ri&e $)er tie.

b. the pri'e (e)e( %i(( +a(( $)er tie. d. ;< %i(( +a(( $)er tie.

34. *n 6i#ure !0.! i+ the $ney &upp(y in'rea&e& +a&ter than $neydeand then:a. the pri'e (e)e( %i(( ri&e $)er tie. '. ;< %i(( ri&e $)er tie.

b. the pri'e (e)e( %i(( +a(( $)er tie. d. ;< %i(( +a(( $)er tie.

35. *n 6i#ure !0.!, i+ $ney deand in'rea&e& then:a. the eui(ibriu pri'e (e)e( ri&e&. '. the $ney &upp(y ri&e&.

b. the eui(ibriu pri'e (e)e( +a((&. d. the $ney &upp(y +a((&.

3. *n 6i#ure !0.!, i+ the $ney &upp(y in'rea&e& then:a. the eui(ibriu pri'e (e)e( ri&e&. '. the $ney &upp(y ri&e&.

b. the eui(ibriu pri'e (e)e( +a((&. d. the $ney &upp(y +a((&.

37. ea( $ney deand i&:a. d/<. '. the pur'ha&in# p$%er $+ $ney ba(an'e&.

b. a +un'ti$n $+ rea( ;< and the intere&t rate. d. a(( $+ the ab$)e.

8/20/2019 ECO 302 Week 7 Quiz


3. ea( $ney deand i&:a. $ney deand a+ter ta1e&. '. deterined by the 'entra( bank.

b. a +un'ti$n $+ rea( ;< and the intere&t rate. d. a(( $+ the ab$)e.

3. ea( $ney deand i&:a. deterined by the 'entra( bank. '. the pur'ha&in# p$%er $+ $ney

ba(an'e&. b. $ney deand a+ter ta1e&. d. a(( $+ the ab$)e.

40. *+ the $ney &upp(y d$ub(e&, thena. rea( ;< d$ub(e&. '. the intere&t rate, i, d$ub(e&.

b. rea( $ney deand d$ub(e&. d. n$ne $+ the ab$)e.

4!. *+ the $ney &upp(y d$ub(e&, thena. ;< d$ub(e&. '. the intere&t rate, i, d$ub(e&.

b. the pri'e (e)e( d$ub(e&. d. n$ne $+ the ab$)e.

42. 9nder pri'e (e)e( tar#etin# the $ney &upp(y be'$e&:a. neutra(. '. e1$#en$u&.

b. end$#en$u&. d. predeterined.

43. ;urin# a re'e&&i$n,a. the intere&t rate and rea( ;< +a(( tendin# t$ 'au&e $ney deand t$ +a((. '.

the intere&t rate +a((& tendin# t$ 'au&e $ney deand t$ ri&e, but i& at (ea&t part(y $++&et by rea( ;< +a((in# tendin# t$ 'au&e $ney deand t$ +a((. b. the intere&t rate and rea( ;< ri&e tendin# t$ 'au&e $ney deand t$ ri&e. d.

the intere&t rate ri&in# and rea( ;< +a((in# tend t$ 'au&e $ney deand t$ri&e.

8/20/2019 ECO 302 Week 7 Quiz


44. *+ p$(i'y aker& tar#et a &pe'i+i' pri'e (e)e(, then:a. the $ney &upp(y be'$e& e1$#en$u& in the $de(.'. the $ney &upp(y

be'$e& end$#en$u& in the $de(. b. the $ney &upp(y be'$e& predeterined in the $de(. d. the $ney&upp(y be'$e& neutra( in the $de(.

45. *n 9S data +r$ !54 t$ 200, the pri'e (e)e( i&:a. pr$'y'(i'a( a& %e %$u(d e1pe't i+ the $netary auth$rity d$e& n$t )ary the$ney %ith the bu&ine&& 'y'(e. '. '$unter'y'(i'a( a& %e %$u(d e1pe't i+ the$netary auth$rity d$e& n$t )ary the $ney &upp(y %ith the bu&ine&& 'y'(e.

b. pr$'y'(i'a( a& %e %$u(d e1pe't i+ the $netary auth$rity )arie& the $ney&upp(y %ith the bu&ine&& 'y'(e. d. '$unter'y'(i'a( a& %e %$u(d e1pe't i+ the$netary auth$rity )arie& the $ney &upp(y %ith the bu&ine&& 'y'(e.

4. ea( $ney deand i&:a. >?=, i@.'. < A >?=, i@.

b. eua( t$ the $ney &upp(y. d. a(( $+ the ab$)e.

47. $ney deand and the $ney &upp(y are br$u#ht int$ eui(ibriu by:a. rea( ;< adBu&tin#. '. the intere&t rate adBu&tin#.

b. the pri'e (e)e( adBu&tin#. d. the rea( %a#e rate adBu&tin#.

4. <ri'e (e)e( tar#etin# ip(ie& that the $netary auth$rity:a. 'han#e& the $ney &upp(y t$ at'h $)eent& in $ney deand. '.

'han#e& $ney deand and $ney &upp(y t$ at'h $)eent& in the pri'e

(e)e(. b. 'han#e& $ney deand t$ at'h $)eent& in the $ney &upp(y. d.'han#e& $ney deand t$ at'h $)eent& in the pri'e (e)e(.

4. he neutra(ity $+ $ney ip(ie&:a. $ne tie 'han#e& in rea( )ariab(e& d$ n$t a++e't $ney deand. '. $netie 'han#e& in n$ina( )ariab(e& d$ n$t a++e't $ney deand.

b. $ne tie 'han#e& in the $ney &upp(y d$ n$t a++e't rea( )ariab(e&. d. $ne

tie 'han#e& in the $ney &upp(y d$ n$t a++e't n$ina( )ariab(e&.

8/20/2019 ECO 302 Week 7 Quiz


50. *+ +$r $ne peri$d the $ney &upp(y in'rea&e&, then:a. rea( ;< in'rea&e&. '. rea( 'apita( per %$rker in'rea&e&.

b. the rea( %a#e in'rea&e&. d. n$ne $+ the ab$)e.

5!. *+ ae& per+$r& $ne h$ur $+ h$u&e '(eanin# +$r >i((y in e1'han#e +$r >i((y per+$rin# $ne h$ur $+ yard%$rk +$r ae&, then the e1'han#e in)$()eda. barter. '. ite& %ith n$ intrin&i' )a(ue.

b. +iat $ney. d. the 'apita( &er)i'e& arket.

52. 6iat $ney %$u(d $&t (ike(y h$(d the d$inant p$&iti$n a& a ediu$+ e1'han#e %hena. (e#a( re&tri'ti$n& pre)ent pri)ate +ir& +r$ i&&uin# &a((, intere&t-bearin#

b$nd& a& &ub&titute& +$r $ney. '. the #$)ernent reuire& that ta1e& be paid u&in# the +iat $ney. b. the #$)ernent de'(are& the $ney t$ be (e#a( tender. d. a(( $+ theab$)e.

53. he $netary ba&e d$e& n$t in'(udea. t$ta( 'urren'y in 'ir'u(ati$n. '. bank dep$&it& at the 6edera( e&er)e.

b. 'he'kab(e dep$&it&. d. a(( $+ the ab$)e.

54. Che'kab(e dep$&it& are

a. dep$&it& at +inan'ia( in&tituti$n& that 'an be %ithdra%n $n(y a+ter payin# a pena(ty. '. dep$&it& at +inan'ia( in&tituti$n& that 'an be %ithdra%n by%ritin# a 'he'k.

b. &a)in#& dep$&it& at +inan'ia( in&tituti$n& that 'an be %ithdra%n by tran&+er t$an$ther a''$unt. d. dep$&it& $n %hi'h the bank 'he'k& the dep$&it &(ip'are+u((y.

55. *+ 8(i'ia tran&+er& D!00 +r$ her &a)in#& dep$&it a''$unt t$ her

'he'kab(e dep$&it a''$unt, then !a. in'rea&e& and 2 &tay& the &ae. '. in'rea&e& and 2 de'rea&e&.

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b. in'rea&e& and 2 in'rea&e&. d. de'rea&e& and 2 in'rea&e&.

5. *+ "a#en tran&+er& D!00 +r$ hi& 'he'kab(e dep$&it a''$unt t$ hi&&a)in#& dep$&it a''$unt, then !a. in'rea&e& and 2 &tay& the &ae. '. de'rea&e& and 2 &tay& the &ae.

b. in'rea&e& and 2 in'rea&e&. d. de'rea&e& and 2 in'rea&e&.

57. 9.S. data &h$% that 'he'kab(e dep$&it& ha)ea. in'rea&ed in ip$rtan'e a& a payent eth$d. '. in'rea&ed inip$rtan'e a& a p$rti$n $+ !.

b. de'rea&ed in ip$rtan'e a& a payent eth$d. d. de'rea&ed inip$rtan'e a& a p$rti$n $+ the $netary ba&e.

5. Whi'h a&&et be($% i& the (ea&t u&e+u( ($n#-ter &t$re $+ )a(uea. b$nd&. '. either ?a@ $r ?b@.

b. $%ner&hip $+ 'apita(. d. $ney.

5. 8 h$u&eh$(d& deand +$r $ney ari&e& +r$ the h$u&eh$(d&a. $ptia( &trate#y +$r $ney ana#eent. '. need t$ pr$)ide 'apita(&er)i'e& t$ the arket.

b. need t$ pr$)ide (ab$r &er)i'e& t$ the arket. d. de&ire t$ in'rea&e it&tran&a'ti$n& '$&t&.

0. he epiri'a( e)iden'e $n the deand +$r $ney +ind& thata. an de'rea&e in the pri'e (e)e( ($%er& the rea( deand +$r $ney in the &ae

pr$p$rti$n. '. an in'rea&e in the pri'e (e)e( ($%er& the n$ina( deand +$r$ney in the &ae pr$p$rti$n.

b. intere&t rate& are ne#ati)e(y re(ated t$ $ney. d. rea( ;< i&ne#ati)e(y re(ated t$ $ney.

!. he p$int %here $ney &upp(ied eua(& $ney deanded deterine&a. the rea( intere&t rate. '. the pri'e (e)e(.

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b. the n$ina( intere&t rate. d. the rea( return $n 'apita( &er)i'e&.

2. Whi'h $+ the +$(($%in# &'enari$& %$u(d $&t(y (ike(y 'au&e the pri'e(e)e( t$ d$ub(ea. he n$ina( uantity $+ $ney deanded d$ub(e&. '. he n$ina( %a#ed$ub(e&.

b. he n$ina( uantity $+ $ney deanded +a((& by ha(+. d. hen$ina( uantity $+ $ney &upp(ied d$ub(e&.

3. *n #enera( eui(ibriu, a $ne-tie in'rea&e in the n$ina( uantity $+

$ney &upp(ieda. d$e& n$t a++e't the intere&t rate. '. de'rea&e& the intere&t rate.

b. in'rea&e& the intere&t rate. d. either ?a@ $r ?b@.

4. he #enera( eui(ibriu in the arr$ $de( a&&ue& that pri'e& area. in+(e1ib(e and adBu&t &($%(y. '. una++e'ted by 'han#e& in the $ney&upp(y.

b. +(e1ib(e and adBu&t rapid(y. d. unip$rtant in e1p(ainin# $neydeand.

5. $&t e'$n$i&t& a#ree that $ney i&a. n$t neutra( in the ($n#-run. '. neutra( in the ($n#-run.

b. n$t neutra( in the &h$rt- $r ($n#-run. d. neutra( in the &h$rt-run.

S-O(T !.SWE(

!. What i& the $ney deand +un'ti$n and %hat i& the dire'ti$n $+in+(uen'e $+ the )ariab(e& $n $ney deand

2. Why d$e& e'$n$izin# $n $ney ba(an'e& (ead t$ #reater tran&a'ti$n&'$&t

8/20/2019 ECO 302 Week 7 Quiz


3. "$% d$ $ney deand and the $ney &upp(y intera't t$ deterinethe pri'e (e)e(

4. What d$e& $ney neutra(ity ean

5. What %$u(d happen t$ $ney deand, the $ney &upp(y and the pri'e(e)e( i+ there %ere a p$&iti)e &h$'k t$ pr$du'ti$n

. 8''$rdin# t$ the arr$ $de(, %i(( the pri'e (e)e( be hi#h $r ($% in a

re'e&&i$n

Cha&ter ''

T()E*+!LSE

!. he rea( rate $+ intere&t i& the n$ina( rate $+ intere&t (e&& the e1pe'tedin+(ati$n rate.

2. he rea( return $n $ney i& zer$.

3. 8n in'rea&e in the $ney #r$%th rate a++e't& h$u&eh$(d '$n&upti$n,C.

4. *n the arket '(earin# $de(, an in'rea&e in the $ney #r$%th rate(ead& t$ an in'rea&e in the in+(ati$n rate.

5. *n the arket '(earin# $de( an in'rea&e in the $ney #r$%th rate(ead& t$ a de'rea&e in the n$ina( intere&t rate.

. *n+(ati$n i& a ea&ure $+ the #r$%th $+ pri'e& in the )$(ati(e +$$d and

ener#y 'ate#$rie&.

8/20/2019 ECO 302 Week 7 Quiz


7. "$u&eh$(d& %ith rati$na( e1pe'tati$n& ha)e n$ err$r& in their predi'ti$n&.

. E1pe'ted and a'tua( in+(ati$n are eua( in a $de( %ith rati$na(e1pe'tati$n&.

. ;e+(ati$n $''ur& %hen the in+(ati$n rate &($%& d$%n, but reain& p$&iti)e.

!0. ;ata &h$% a &tr$n# ne#ati)e re(ati$n&hip bet%een the in+(atin rate andthe #r$%th rate $+ n$ina( 'urren'y.

%)LT,PLE C-O,CE

!. he a'tua( in+(ati$n rate i&:a. the 'han#e in the pri'e (e)e( di)ided by the $ri#ina( pri'e (e)e(. '. the$ri#ina( pri'e (e)e( di)ided by the ne% pri'e (e)e(.

b. he $ri#ina( pri'e (e)e( di)ided the 'han#e in pri'e (e)e(. d. the ne% pri'e (e)e( di)ided by the $ri#ina( pri'e (e)e(.

2. *+ the pri'e (e)e( (a&t year %a& !!0 and thi& year i& !!, then thein+(ati$n rate bet%een (a&t peri$d and thi& peri$d %a&:

a. 7.3F. '. F b. 7F. d. .F.

3. *+ the pri'e (e)e( (a&t year %a& !35 and thi& year i& !42, then thein+(ati$n rate bet%een (a&t peri$d and thi& peri$d %a&:a. 4.F. '. 5.!F

b. 7F. d. 5.2F.

8/20/2019 ECO 302 Week 7 Quiz


4. *+ the pri'e (e)e( (a&t year %a& !0 and thi& year i& !02, then thein+(ati$n rate bet%een (a&t peri$d and thi& peri$d %a&:a. -3.F '. 3.F

b. 4F. d. -3.F.

5. he une1pe'ted in+(ati$n rate i&:a. the e1pe'ted in+(ati$n rate (e&& the a'tua( in+(ati$n rate. '. the a'tua(in+(ati$n rate (e&& the e1pe'ted in+(ati$n rate.

b. the e1pe'ted in+(ati$n rate di)ided by the a'tua( in+(ati$n rate. d. thea'tua( in+(ati$n rate di)ided by the e1pe'ted in+(ati$n rate.

. *+ the e1pe'ted in+(ati$n rate i& 5F and the a'tua( in+(ati$n rate i& 4F,then the une1pe'ted in+(ati$n rate i&:a. !F. '. -!F.

b. F. d. !.25F.

7. *+ the e1pe'ted in+(ati$n rate i& 3F and the a'tua( in+(ati$n rate i& 5F,then the une1pe'ted in+(ati$n rate i&:a. 2F. '. -2F.

b. F. d. !.7F.

. *+ the e1pe'ted in+(ati$n rate i& 5F and the une1pe'ted in+(ati$n rate i&4F, then the a'tua( in+(ati$n rate i&:a. !F. '. -!F.

b. F. d. !.25F.

. *+ the e1pe'ted in+(ati$n rate i& 3F and the une1pe'ted in+(ati$n rate i&-2F, then the a'tua( in+(ati$n rate i&:a. 2F. '. -2F.

b. !F. d. !.7F.

8/20/2019 ECO 302 Week 7 Quiz


!0. he rea( intere&t rate i&a. the n$ina( intere&t rate p(u& the e1pe'ted in+(ati$n rate. '. then$ina( intere&t rate (e&& the e1pe'ted in+(ati$n.

b. the n$ina( intere&t rate di)ided by the e1pe'ted in+(ati$n rate. d. thee1pe'ted in+(ati$n rate di)ided by the n$ina( rate $+ intere&t.

!!. *+ the n$ina( intere&t rate i& 5F and the e1pe'ted in+(ati$n rate i& 2F,then the e1pe'ted rea( rate $+ intere&t i&:a. 7F. '. 2.5F.

b. 3F d. -3F.

!2. *+ the n$ina( intere&t rate i& 2F and the a'tua( in+(ati$n rate i& 5F,then the a'tua( rea( rate $+ intere&t i&:a. 7F. '. 2.5F.

b. 3F d. -3F.

!3. When the rea( intere&t rate, r, 'an di++er +r$ the n$ina( intere&t rate,i, then:a. $ney deand depend& $n the rea( rate $+ intere&t. '. '$n&upti$ndepend& $n the n$ina( rate $+ intere&t.

b. '$n&upti$n depend& $n the rea( rate $+ intere&t. d. $ney deand n$($n#er depend& $n any intere&t rate.

!4. 8n inde1ed b$nd i& $ne:a. that pay& a rea( rate $+ intere&t. '. that i& inde1ed t$ the e1pe'ted

in+(ati$n rate. b. that i& inde1ed t$ the e'$n$i' #r$%th rate. d. that pay& a n$ina( rate$+ intere&t.

!5. he data $n '$untrie& ar$und the %$r(d &h$% that:a. the in+(ati$n rate i& p$&iti)e(y re(ated t$ the #r$%th $+ 'urren'y. '. thein+(ati$n rate i& in)er&e(y re(ated t$ the #r$%th $+ 'urren'y.

b. the in+(ati$n rate i& unre(ated t$ the #r$%th in 'urren'y. d. '$untrie&

%ith hi#h 'urren'y #r$%th rate& ha)e hi#her rea( ;<.

8/20/2019 ECO 302 Week 7 Quiz


!. he n$ina( rate $+ intere&t $n $ney i&:a. zer$. '. inu& the in+(ati$n rate.

b. rea( rate $+ return $n $ney (e&& the in+(ati$n rate. d. a(( $+ the ab$)e.

!7. he n$ina( rate $+ intere&t $n $ney i&:a. p$&iti)e. '. inu& the in+(ati$n rate.

b. rea( rate $+ return $n $ney p(u& the in+(ati$n rate. d. a(( $+ the ab$)e.

!. he rea( rate $+ intere&t $n $ney i&:a. zer$. '. inu& the in+(ati$n rate.

b. the n$ina( rate $+ return $n $ney p(u& the in+(ati$n rate. d. a(( $+ theab$)e.

!. *+ the intere&t rate i& 5F and the in+(ati$n rate i& 3F, then the n$ina(rate $+ return $n $ney i&:a. 2F. '. 5F

b. 3F d. zer$.

20. *+ the intere&t rate i& 5F and the in+(ati$n rate i& 3F, then the rea( rate$+ return $n $ney i&:a. 2F. '. -3F

b. 3F d. zer$.

2!. *+ the intere&t rate i& F and the in+(ati$n rate i& 2F, then the n$ina(rate $+ return $n $ney i&:a. 2F. '. F

b. 4F d. zer$.

8/20/2019 ECO 302 Week 7 Quiz


22. *+ the intere&t rate i& F and the in+(ati$n rate i& 2F, then the rea( rate$+ return $n $ney i&:a. 2F. '. -2F

b. 4F d. zer$.

23. *n the arket '(earin# $de( $ney #r$%th i& $de(ed a&:a. rand$. '. )ia the pur'ha&e $+ b$nd&.

b. (up-&u tran&+er&. d. a(( $+ the ab$)e.

24. >up &u tran&+er& +$r $ney #r$%th ip(ie&:

a. %e need t$ ana(yze h$% tran&+er a++e't& ;<. '. %e need t$ana(yze h$% tran&+er& a++e't 'apita(.

b. %e d$ n$t ha)e t$ ana(yze h$% h$u&eh$(d& adBu&t their beha)i$r t$ attra'ttran&+er&. d. %e need t$ $de( h$% h$u&eh$(d& adBu&t their beha)i$r t$attra't tran&+er&.

25. he e1pe'ted rate $+ in+(ati$n i&:a. the rea( rate $+ intere&t (e&& the n$ina( rate $+ intere&t. '. then$ina( rate $+ intere&t p(u& the rea( rate $+ intere&t.

b. the n$ina( intere&t rate $n n$ina( b$nd& (e&& the intere&t rate $n inde1ed b$nd&. d. the intere&t rate $n inde1ed b$nd& (e&& the n$ina( intere&t rate $nn$ina( b$nd&.

2. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:

a. an in'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the pri'e(e)e(. b. a de'rea&e in $ney deand. d. a(( $+ the ab$)e.

27. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. an in'rea&e in the n$ina( intere&t rate. '. a de'rea&e in the pri'e(e)e(.

b. an in'rea&e in $ney deand. d. a(( $+ the ab$)e.

8/20/2019 ECO 302 Week 7 Quiz


2. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:

a. a de'rea&e in the n$ina( intere&t rate. '. an in'rea&e in'$n&upti$n.

b. a de'rea&e in $ney deand. d. a(( $+ the ab$)e.

2. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. a de'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the pri'e(e)e(.

b. an in'rea&e in '$n&upti$n. d. a(( $+ the ab$)e.

30. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. an in'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the in+(ati$nrate.


3!. 8n in'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. a de'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the in+(ati$nrate.


32. he #r$%th rate $+ rea( $ney ba(an'e& i&:a. the #r$%th rate $+ n$ina( $ney (e&& the in+(ati$n rate. '. the #r$%thrate $+ n$ina( $ney p(u& the in+(ati$n rate.

b. the #r$%th rate $+ n$ina( $ney di)ided by the in+(ati$n rate. d. thein+(ati$n rate di)ided by the #r$%th rate $+ n$ina( $ney.

33. When the rate $+ #r$%th rate $+ $ney i& '$n&tant:

8/20/2019 ECO 302 Week 7 Quiz


a. the in+(ati$n rate eua(& the #r$%th rate $+ $ney. '. rea( $ney ba(an'e are +i1ed $)er tie. b. the n$ina( intere&t rate i& the rea( rate $+ intere&t p(u& the #r$%th rate $+$ney.d. a(( $+ the ab$)e.

34. When the rate $+ #r$%th rate $+ $ney i& '$n&tant:a. the in+(ati$n rate eua(& the #r$%th rate $+ $ney. '. rea( $ney

ba(an'e are de'(inin#. b. the n$ina( intere&t rate ri&e&. d. a(( $+ the ab$)e.

35. When the rate $+ #r$%th rate $+ $ney i& '$n&tant:a. the in+(ati$n rate i& #r$%in#. '. rea( $ney ba(an'e are de'(inin#.

b. the n$ina( intere&t rate i& the rea( rate $+ intere&t p(u& the #r$%th rate $+$ney.d. a(( $+ the ab$)e.

3. When the rate $+ #r$%th rate $+ $ney i& '$n&tant:a. the in+(ati$n rate i& #r$%in#. '. rea( $ney ba(an'e are '$n&tant $)ertie.

b. the n$ina( intere&t rate i& de'(inin#. d. a(( $+ the ab$)e.

37. ea( re)enue +r$ printin# $ney i& appr$1iate(y:a. the n$ina( intere&t rate tie& rea( $ney ba(an'e&. '. the rea(intere&t rate tie& n$ina( $ney ba(an'e&.

b. the $ney #r$%th rate tie& rea( $ney ba(an'e&. d. the $ney #r$%thrate tie& n$ina( $ney ba(an'e&.

3. *+ the in+(ati$n rate i& 3F and the n$ina( intere&t rate i& 5F and the$ney #r$%th rate in'rea&e& t$ 5F, then %e %$u(d e1pe't the n$ina( intere&t rate t$

be:a. !0F. '. zer$.

b. 7F. d. 2F.

8/20/2019 ECO 302 Week 7 Quiz


3. *+ the in+(ati$n rate i& 3F and the n$ina( intere&t rate i& 5F and the$ney #r$%th rate in'rea&e& t$ 5F, then %e %$u(d e1pe't the in+(ati$n rate t$ be:a. !0F. '. 5F.

b. 7F. d. 2F.

40. *+ the in+(ati$n rate i& 3F and the n$ina( intere&t rate i& 5F and the$ney #r$%th rate in'rea&e& t$ 5F, then %e %$u(d e1pe't rea( $ney ba(an'e& t$:a. +a((. '. reain un'han#ed.

b. in'rea&e. d. t$ +(u'tuate.

4!. *+ the in+(ati$n rate i& 2F and the n$ina( intere&t rate i& 4F and the$ney #r$%th rate in'rea&e& t$ 3F, then %e %$u(d e1pe't the n$ina( intere&t rate t$

be:a. F. '. 5F.

b. zer$. d. 2F.

42. *+ the in+(ati$n rate i& 2F and the n$ina( intere&t rate i& 4F and the$ney #r$%th rate in'rea&e& t$ 5F, then %e %$u(d e1pe't the in+(ati$n rate t$ be:a. F. '. 5F.

b. 7F. d. 2F.

43. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. a de'rea&e in the n$ina( intere&t rate. '. a de'rea&e in the pri'e(e)e(.


44. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. a de'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the pri'e(e)e(.


8/20/2019 ECO 302 Week 7 Quiz


45. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. an in'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the pri'e(e)e(.


4. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. an in'rea&e in the n$ina( intere&t rate. '. a de'rea&e in the pri'e(e)e(.


47. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. a de'rea&e in the n$ina( intere&t rate. '. a de'rea&e in the in+(ati$nrate.


4. 8 de'rea&e in the $ney #r$%th rate in the arket '(earin# $de('au&e&:a. an in'rea&e in the n$ina( intere&t rate. '. an in'rea&e in the in+(ati$nrate.


4. *+ the in+(ati$n rate i& 3F and the n$ina( intere&t rate i& 5F and the$ney #r$%th rate de'rea&e& t$ 2F, then %e %$u(d e1pe't the in+(ati$n rate t$ be:a. F. '. 5F.

b. 7F. d. 2F.

50. *+ the in+(ati$n rate i& 3F and the n$ina( intere&t rate i& 5F and the$ney #r$%th rate in'rea&e& t$ 2F, then %e %$u(d e1pe't the n$ina( intere&t rate t$

be:

a. 4F. '. 5F. b. 7F. d. 2F.

8/20/2019 ECO 302 Week 7 Quiz


5!. *n+(ati$n i&

a. a '$ntinuin# up%ard $)eent in the pri'e (e)e(. '. a '$ntinuin#up%ard $)eent in the pri'e& $+ $i( and +$$d.

b. a $ne-tie up%ard $)eent in the pri'e (e)e(. d. a '$ntinuin#up%ard $)eent in the pri'e $+ (ab$r.

52. ;e+(ati$n i&a. a $ne-tie d$%n%ard $)eent in the pri'e (e)e(. '. a de'(inin#, but

p$&iti)e, rate $+ in+(ati$n.

b. a '$ntinuin# d$%n%ard $)eent in the pri'e (e)e(. d. a'$ntinuin# up%ard $)eent in the pri'e $+ (ab$r.

53. 6r$ 2000 t$ 200, the rate $+ 'han#e $+ pri'e& in apan %a& -0.2F per year. hi& i& an e1ap(e $+ a. in+(ati$n. '. de+(ati$n.

b. hyperin+(ati$n. d. di&in+(ati$n.

54. Cr$&&-'$untry data $n in+(ati$n rate& &h$%& a &tr$n# and p$&iti)ea&&$'iati$n %ith thea. di&in+(ati$n rate +$r the pre)i$u& peri$d. '. #r$%th rate $+ n$ina('urren'y.

b. n$ina( and rea( intere&t rate&. d. #r$%th rate $+ rea( 'urren'y.

55. "$u&eh$(d& %hi'h +$r rati$na( e1pe'tati$n& %i((a. e1hibit pr$'y'(i'a( pattern& in their err$r& $)er tie.'. e1hibitde+(ati$nary pattern& in their err$r& $)er tie.

b. e1hibit '$unter'y'(i'a( pattern& in their err$r& $)er tie. d. n$t e1hibita &y&teati' pattern $+ err$r& $)er tie.

5. *+ the in+(ati$n rate bet%een (a&t year and thi& year i& 5F, and the pri'e(e)e( (a&t year %a& !25, then the pri'e (e)e( thi& year i&

8/20/2019 ECO 302 Week 7 Quiz


a. !3!.25. '. !20.00. b. !30.00. d. !00.00.

57. *+ the in+(ati$n rate bet%een (a&t year and thi& year i& -5F, and the pri'e(e)e( (a&t year %a& !25, then the pri'e (e)e( thi& year i&a. !00.00. '. !20.00.

b. !!.75.d. !3!.25.

5. "$u&eh$(d& %ith rati$na( e1pe'tati$n& %i((a. ake a''urate predi'ti$n& ea'h peri$d. '. ake pr$'y'(i'a( err$r& in

their predi'ti$n&. b. ha)e n$ err$r& in their predi'ti$n&. d. ha)e err$r& in their predi'ti$n&.

5. *+ the n$ina( intere&t rate i& 7F and the e1pe'ted in+(ati$n rate i& 4F,then thea. e1pe'ted rea( intere&t rate i& 3F. '. a'tua( n$ina( intere&t rate i& 3F.

b. a'tua( rea( intere&t rate i& 3F. d. e1pe'ted n$ina( intere&t rate i& 4F.

0. he >i)in#&t$n &ur)eya. a&k& ab$ut 500 rand$(y-'h$&en h$u&eh$(d& +$r their +$re'a&t& $+ the C<*. '.

u&e& pri'e& $n inde1ed b$nd& t$ 'a('u(ate in+(ati$n e1pe'tati$n&. b. a&k& ab$ut 50 e'$n$i&t& +$r their +$re'a&t& $+ the C<*. d. u&e& therea( intere&t rate t$ 'a('u(ate e&tiate& $+ the n$ina( intere&t rate.

!. *+ the intere&t rate $n a re#u(ar rea&ury b$nd i& F and the intere&trate $n an inde1ed b$nd i& 3F, then thea. rea( intere&t rate i& 5F. '. e1pe'ted in+(ati$n rate i& 5F.

b. rea( intere&t rate i& F. d. e1pe'ted in+(ati$n rate i& F.

2. *+ the intere&t rate $n a re#u(ar rea&ury b$nd i& 7F and the intere&t

rate $n an inde1ed b$nd i& 3F, then thea. e1pe'ted in+(ati$n rate i& !0F. '. e1pe'ted in+(ati$n rate i& 5F.

8/20/2019 ECO 302 Week 7 Quiz


b. rea( intere&t rate i& 7F. d. rea( intere&t rate i& 3F..

3. *n a $de( %ith a n$nzer$ rate $+ in+(ati$n, the rea( rate $+ return +r$$%nin# 'apita(a. eua(& the rea( intere&t rate. '. eua(& the n$ina( intere&t rate.

b. i& #reater than the rea( intere&t rate. d. i& #reater than the n$ina(intere&t rate.

4. *n a $de( %ith a n$nzer$ rate $+ in+(ati$n, rea( $ney deandeddepend& $n

a. the rea( intere&t rate. '. the n$ina( intere&t rate. b. the rea( depre'iati$n rate. d. the n$ina( depre'iati$n rate.

5. *+ the in+(ati$n rate eua(& 5F and the t$ta( rea( rate $+ return +r$$%nin# 'apita( eua(& 2F, then thea. the depre'iati$n rate eua(& 2F. '. n$ina( intere&t rate eua(& 2F.

b. rea( intere&t rate eua(& 2F. d. n$ina( intere&t rate i& #reater than 2F.

S"O 8GSWE

!. ;eri)e the re(ati$n&hip bet%een n$ina( and rea( intere&t rate&.

2. 8+ter a(($%in# +$r in+(ati$n e1pe'tati$n& %hy d$e& rea( $ney deand&ti(( depend $n the n$ina( rate $+ intere&t

3. What ad)anta#e& are there t$ $de(in# $ney #r$%th a& (up-&utran&+er&

4. What happen& in the arket '(earin# $de( %hen the $ney #r$%th

rate in'rea&e&

8/20/2019 ECO 302 Week 7 Quiz


5. What i& the #$)ernent re)enue +r$ printin# $ney

. *+ h$u&eh$(d& ha)e rati$na( e1pe'tati$n&, %$u(d they e)er ake err$r&in predi'tin# in+(ati$n E1p(ain brie+(y.

7. *n a $de( %ith n$nzer$ in+(ati$n, %hat i& the eui(ibriu re(ati$n bet%een the intere&t rate and the rate $+ return +r$ $%nin# 'apita(

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ECO 302 Week 7 Quiz