eco1 The Fed buys and sells bonds as a part of its policy to reach all of the fo
ID: 1091612 • Letter: E
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eco1
The Fed buys and sells bonds as a part of its policy to reach all of the following objectives except: High unemployment. Economic growth. Stability of financial markets and institutions. Price stability If in the long run, real GDP returns to its potential level, then in the long run, the Phillips curve is upward sloping. the Phillips curve is vertical. the Phillips curve disappears. the Phillips curve represents a structural relationship. Nobel laureate Milton Friedman and his followers belong to a school of thought known as monetarism. What do the monetarists argue the Fed should target? The Fed should target BOTH the interest rate and the money supply. The Fed should target the money supply, not the interest rate; and that it should adopt the monetary growth rule. The Fed should target NEITHER the interest rate nor the money supply. The Fed should target the interest rate; not the money supply, and that it should adopt the monetary growth rule. Which of the following is not counted in Ml? currency in circulation coins in circulation checking account balances credit card balances traveler's check balances The graph on the right shows the relationship between country's initial level of GDP per capita and its growth rate over the following years. The horizontal axis shows the initial level of GDP per capita, and the vertical axis shows the rate at which GDP per capita is growing. Use the graph to help determine which of the following statements regarding economic growth are true: The industrial countries such as Ireland and Japan that had the lowest incomes in 1960 grew the fastest between 1960 and 2004. High-income countries should be in the upper-right part of the graph. Low-income countries should be in the lower-left part of the graph. Countries like Switzerland and the United States that had the highest incomes in 1960 grew the fastest. Note: Data are real GDP per capita in 2000 dollars. Each point in the figure represents one industrial country. Source: Authors' calculations from data in Alan Heston. Robert Summers and Bettina Aten. Penn World Table Version 6.2. Center for International Comparisons of Production. Income and Prices at the University of Pennsylvania. September 2006.Explanation / Answer
1. A
2. B
3. B
4. D
5. A
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