Question

QUESTION 131

1. An increase in the interest rate should ________ the demand for dollars and the value of the dollar, and net exports should ________.

   		increase; increase
   		decrease; decrease
   		increase; decrease
   		decrease; increase
   		increase; not change

1 points   

QUESTION 132

1. If the Federal Reserve targets the interest rate and the money demand curve shifts to the left, then the Fed

   		cannot maintain the interest rate target.
   		can maintain the interest rate target with no change in the money supply.
   		can maintain the interest rate target, but at a higher quantity of the money supply.
   		can maintain the interest rate target, but at a lower quantity of the money supply.

1 points   

QUESTION 133

1. An increase in the price level causes

   		a movement up along the money demand curve.
   		a movement down along the money demand curve.
   		the money demand curve to shift to the left.
   		the money demand curve to shift to the right.

1 points   

QUESTION 134

1. Falling interest rates can

   		lower the cost of buying new homes and fewer new homes will be purchased.
   		raise the cost of buying new homes and fewer new homes will be purchased.
   		raise the cost of borrowing for firms and decrease investment.
   		increase a firm's stock price, which causes firms to issue more stock shares, and thus increases funds for investment.

1 points   

QUESTION 135

1. If the amount you owe on your house is greater than the price of the house, you have

   		a mortgage rate that is too high.
   		a reverse mortgage on your house.
   		no value to your house.
   		negative equity in your house.

1 points   

QUESTION 136

1. Fiat money is generally issued by

   		private banks.
   		brokerage firms.
   		central banks.
   		major multinational corporations.

1 points   

QUESTION 137

1. According to the quantity theory of money, if the money supply grows at 6%, real GDP grows at 2%, and the velocity of money is constant, then the inflation rate will be

   		8%.
   		6%.
   		4%.
   		2%.

1 points   

QUESTION 138

1. An economy without money would have no exchanges of goods and services.

   True

   False

1 points   

QUESTION 139

1. From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply, then the Federal Reserve would most likely

   		decrease interest rates.
   		increase income tax rates.
   		increase interest rates.
   		decrease income tax rates.

1 points   

QUESTION 140

1. Article Summary

   With global borrowing costs so low, economic analysts are warning that central banks need to be prepared to set negative interest rates during the next economic downturn. Several central banks in Europe set negative interest rates in 2014, as did the Japanese central bank in 2016, in an attempt to spur lending. The global market value of negative-yielding bonds rose to $8.6 trillion in mid-2017 due to low inflation and increased perceptions of geopolitical risk. The current U.S. economic expansion is the third longest since the 19th century, and credit markets are showing signs of reaching a cyclical peak. According to Harvard professor Kenneth Rogoff, low interest rates this late in an economic cycle are unprecedented, noting that the Fed cut interest rates by an average of 5.5 percentage points in the nine recessions since the 1950s, and this would be impossible today without negative interest rates.
   Source: Sid Verma and Cecile Gutscher, "With Next Recession Looming, Central Banks Better Make Peace With Negative Rates," bloomberg.com, August 14, 2017.
   
   
   Refer to the Article Summary. Implementing a negative interest rate policy, as is discussed in the article summary, would be designed to ________ the price level and ________ real GDP.

   		decrease; decrease
   		increase; decrease
   		decrease; increase
   		increase; increase

Answer 1

1) Increase, Increase..

(Increase in the interest rate causes the more money supply and increase value of currency.so, the foreign investment is also increase and export of the country is increased)..

2) can maintain the interest rate target, but at a higher quantity of the money supply.

(when money demand curve shifts to the left there is a decrease in the demand for money, so in order to maintain the target interest rate, the quantity of money supply should be higher)..

3) the money demand curve to shift to the right.

(the price level increase the quantity of money demanded increase, also causing the money demand curve to increase and shift to right)..

4) raise the cost of buying new homes and fewer new homes will be purchased.

(As lower the interest rate, the money borrowing capacity of individual increase, thus there is more purchasing power to individuals and cost of homes increase due to higher demand and ultimately few homes will be purchased)..

(Please give an up vote if you find it helpful)..