To maintain a fixed exchange rate, when the exchange rate moves above the target level, the central bank must
a. sell foreign currency from reserves.
b. buy foreign currency.
c. raise taxes.
d. raise government spending.
e. pass a law that increases the exchange rate.
Question 2According to Edward Denison, the United States has experienced
a. diseconomies of scale.
b. economies of scale.
c. constant returns to scale.
d. None of the above
Question 3In the 1970s, the largest steelmakers were slow or failed to adopt quickly the latest technology: oxygen furnaces. Some researchers blame
(a) the federal government for its enterprise-crippling policies, subsidies and
import restrictions.
(b) unions for their low productivity efforts and high wage demands.
(c) management for not keeping abreast of global changes in the marketplace.
(d) all of the above.
Question 4_____ believe that the primary causes of the Depression were autonomous declines in aggregate demand initiated by shocks to the IS curve
a. Monetarists.
b. classical economists.
c. early and late Keynesians.
d. early Keynesians only.
Question 5The Land Ordinances of 1785 and 1787 accomplished which of the following?
(a) Established the foundation for future American capitalism by permitting land to pass into private hands
(b) Allowed the practice of primogeniture or inheritance by the oldest son
(c) Permitted land to be treated primarily as a collective good
(d) Provided for a lateral expansion of American socialism
Question 6Which of the following entities was blamed in part for the speculative activity leading to the crash of 1929?
(a) Large manufacturing enterprises
(b) Brokers and their firms who extended loans to customers interested in
buying stocks on the margin
(c) The Federal Reserve System
(d) New mom and pop businesses
Question 7The implementation of new technology can be quick throughout the world if
(a) patent rights are leased and purchased.
(b) unions are strong.
(c) economies are closed to foreign competition.
(d) tariffs are placed on those imported goods and services benefiting from
the technological advancements in the rest of the world.
Question 8An increase in U.S. official reserve assets is entered in the U.S. balance of payments accounts as a
a. credit.
b. debit.
c. current account item.
d. None of the above
Question 9Holding all else constant, when interest rates fall,
(a) yields on common stocks rise above yields on bonds.
(b) yields on common stocks fall below yields on bonds.
(c) yields on common stocks and bonds rise at an equal rate.
(d) yields on common stocks and bonds fall at an equal rate.
Question 10The Keynesians believe that
a. the Fed played a primary role in driving the Great Depression.
b. the Fed played an important role in preventing the Great Depression from being worse than it could have been.
c. the Fed played a negative but secondary role in the Great Depression.
d. the Federal Reserve did all it could to prevent the Great Depression but essentially played no role in it.
Question 11From an economics standpoint, the Articles of Confederation did not provide for
(a) levying taxes to support a central government.
(b) regulating interstate commerce.
(c) enforcing laws, because no federal judiciary was authorized.
(d) any of the provisions mentioned above.
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