In the model of public goods, when the government chooses public goods provision optimally
A) there is no public goods production.
B) public goods are provided in an amount equal to private goods.
C) the marginal rate of substitution of private goods for public goods equals the marginal rate of transformation.
D) GDP is maximized.
Question 2The idea that nominal interest rates rise or fall one-for-one with expected inflation is known as
A) market risk.
B) systematic risk.
C) idiosyncratic risk.
D) the Fisher effect.
Question 3In comparing futures contracts with options contracts, we can say that
A) in a futures contract, the buyer and seller have symmetric rights, whereas in an options contract, the buyer and seller have asymmetric rights.
B) in a futures contract, the buyer and seller have asymmetric rights, whereas in an options contract, the buyer and seller have symmetric rights.
C) in both futures and options contracts, the buyer and seller have symmetric rights.
D) in both futures and options contracts, the buyer and seller have asymmetric rights.
Question 4Expectations about future profitability
A) only affect the level of investment and GDP in the future.
B) only affect the level of investment in the future, but can affect the level of GDP in the present.
C) can affect the level of investment and GDP in the present.
D) only affect the level of GDP in the future, but can affect the level of investment in the present.
Question 5The ways in which monetary policy affect output and prices are known as:
A) channels
B) stations
C) vehicles
D) means
Question 6In what year did sales of gold for investment exceed that for jewelry for the first time?
A) 1933
B) 1971
C) 2001
D) 2009
Question 7Consumption spending comprises what percentage of total spending?
A) 0.7 percent
B) 7 percent
C) 70 percent
D) 700 percent
Question 8The supply curve for credit card services is an increasing function of
A) the price of credit card services.
B) bank profitability.
C) the real interest rate.
D) the quantity of money.
Question 9An increase in expected inflation results in
A) lower nominal interest rates and higher bond prices.
B) lower real interest rates and higher bond prices.
C) higher real interest rates and lower bond prices.
D) higher nominal interest rates and lower bond prices.
Question 10The output an economy can produce with one unit of capital and one unit of labor is ________.
A) indicated by the A variable in the Cobb-Douglas production function
B) commonly referred to as labor productivity
C) a variable that depends on how many units of capital and labor are available
D) all of the above
E) none of the above
Question 11One difference between futures and options contracts is
A) funds change hands daily in the case of options but not with futures.
B) funds change hands daily in the case of futures, but not with options.
C) in the case of futures funds only change hands when they are exercised.
D) futures are designed to reduce risk while options are not.
Question 12If households have information that monetary policy is likely to change in the future, that information will play a role in forming ________.
A) adaptive expectations
B) rational expectations
C) tertiary expectations
D) non-adaptive expectations
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