Demand deposits are:
a. assets of banks, liabilities of depositors.
b. liabilities of banks, assets of depositors.
c. assets of banks and their depositors.
d. liabilities of banks and their depositors.
Question 2The slope of the short-run Phillips curve is consistent with:
a. the long-run trade-off between the unemployment rate and inflation.
b. the long-run trade-off between inflation and GDP.
c. the short-run trade-off between the money supply and interest rates.
d. the short-run trade-off between business productivity and wage contracts.
e. the short-run trade-off between the unemployment rate and inflation.
Question 3If a nonbinding price ceiling is imposed on a market, then the
a. quantity sold in the market will decrease.
b. quantity sold in the market will stay the same.
c. price in the market will increase.
d. price in the market will decrease.
Question 4A bank may hold secondary reserves, such as U.S. government securities because:
a. they pay higher interest rates than deposits at the Fed, and are easily converted into cash assets.
b. they pay higher interest rates than deposits at the Fed, even though they are hard to convert assets.
c. they pay lower interest rates than deposits at the Fed, but are more easily converted into cash assets.
d. they pay lower interest rates than deposits at the Fed, and are hard to convert into cash assets.
Question 5Contrary to what believers in the Phillips curve would say, U.S. economic data from 1955 to 2000 show evidence of:
a. a positive relationship between the unemployment rate and inflation.
b. no short-run relationship between the unemployment rate and inflation.
c. increases in both unemployment and inflation rates.
d. a constant rate of inflation, with changing rates of unemployment.
e. a constant rate of unemployment, with changing rates of inflation.
Question 6If a price ceiling is not binding, then
a. there will be a surplus in the market.
b. there will be a shortage in the market.
c. the market will be less efficient than it would be without the price ceiling.
d. there will be no effect on the market price or quantity sold.
Question 7The predominant liability item for most banks is:
a. deposits.
b. bonds.
c. loans.
d. federal cash reserves.
Question 8The Phillips curve based on the unemployment and inflation rates in the U.S. between 1961 and 1969 was:
a. upward-sloping.
b. downward-sloping.
c. horizontal.
d. vertical.
e. upward-sloping but kinked.
Question 9If a price ceiling is not binding, then
a. the equilibrium price is above the price ceiling.
b. the equilibrium price is below the price ceiling.
c. it cannot be legally enforced.
d. None of the above is correct because all price ceilings must be binding.
Question 10The largest asset item for most banks is:
a. cash.
b. bonds.
c. loans.
d. federal cash reserves.
Question 11The Phillips curve is named after the economist A. W. Phillips, who found that there is:
a. an inverse relationship between the PPI and the budget deficit in the United States.
b. an inverse relationship between wage rates in Great Britain and the unemployment rate.
c. an inverse relationship between economic growth and the unemployment rate in Great Britain.
d. a positive relationship between inflation and the unemployment rate in the United States.
e. a positive relationship between British national debt and economic downturns.
Question 12If a price floor is a binding constraint on a market, then
a. the equilibrium price must be above the price floor.
b. the quantity demanded must exceed the quantity supplied.
c. sellers cannot sell all they want to sell at the price floor.
d. buyers cannot buy all they want to buy at the price floor.
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