urrency and actually reduces debt
c both of the above
d none of the above
13 The cost of printing is always lower than the cost of money. That being the case, why doesn t the Fed just print lots of money
a To have value, the supply of money has to be limited
b The Fed does that all the time anyway
c The decision to print money can only come from the Congress
d None of the above
14 Banks prefer to have many depositors rather than one big one. Why?
a Large number of depositors bring stability to the bank
b The bank will be in trouble if a single large depositor decides to close her account.
c Banks are unwilling to make money on the float.
d a and b
15 A country with comparative advantage in production of wine should
a export its wine
b impose a tariff on wine from other countries
c not specialize in producing wine
d impose a quota on imported wine
16 A strong currency
a is harmful to the economy
b facilitates exports
c facilitates imports
d is trade neutral
17 If a government does nothing to stem its currency value decline in international
markets,
a it is probably aiming at reducing unemployment at home
b it is probably because of an incompetent government that does not understand economics
c it is probably because the government wants to encourage imports
d none of the above
18 Everything else being the same, if inflation goes up in the US,
a the dollar exchange rate against other currencies will go up
b the dollar exchange rate against other currencies will go down
c the dollar exchange rate against other currencies will remain unchanged.
d None of the above
19 Economists advocate free trade because
a trade restrictions lower aggregate output
b trade restrictions reduce international competition
c there could be harmful trade wars
d all of the above
20 Demand primarily includes
a want, need and necessity
b the ability to buy and necessity
c the ability and willingness to buy
d none of the above