ANSWER OUTLINE
ECONOMICS 353 (SECTION 1) L. Tesfatsion/Spring 99
EXERCISE SET 1: 5 POINTS TOTAL DUE: Tuesday, January 26, 9:30 A.M.
*IMPORTANT REMINDER: LATE ASSIGNMENTS CANNOT BE ACCEPTED -- NO EXCEPTIONS*
Please FILL IN YOUR NAME on Side 1 of the accompanying General Purpose
NCS Answer Sheet and use a #2 pencil to MARK YOUR ANSWERS on Side 1 of this
Answer Sheet to the following five multiple choice questions.
(NOTE: Answer sheets can be obtained from Sue Streeter in 382 Heady
Hall if you missed the class handout.)
1. Money is defined as
A. bills of exchange.
B B. anything that is generally accepted in payment for goods and services
or in the repayment of debt.
C. a riskless repository of spending power.
D. the unrecognized liability of governments.
2. Evidence from the United States and other foreign countries indicates that
A A. there is a strong positive association between inflation and the
growth rate of money over long periods of time.
B. there is little support for the assertion that "inflation is always
and everywhere a monetary phenomenon."
C. countries with low monetary growth rates tend to experience higher
rates of inflation, all else constant.
D. money growth is clearly unrelated to inflation.
3. Banks are important to the study of money and the economy because they
A. provide a channel for linking those who want to save with those
who want to invest.
B. have been a source of rapid financial innovation that is expanding
the alternatives available to those wanting to save their money.
C. are the only financial institution to play a role in determining
the quantity of money in the economy.
D. each of the above (A, B, and C)
E E. only A and B of the above.
4. Bond markets are important because
A. they are easily the most widely followed financial markets in the U.S.
B. they are the markets where foreign exchange rates are determined.
C C. they are the markets where interest rates are determined.
D. each of the above.
E. only A and B of the above.
5. Which of the following is most likely to result from a stronger dollar?
A. U.S. goods exported abroad will cost less in foreign countries, so
foreigners will buy more of them.
B. U.S. goods exported abroad will cost more in foreign countries and
so foreigners will buy more of them.
C C. U.S. goods exported abroad will cost more in foreign countries and
so foreigners will buy fewer of them.
D. Americans will purchase fewer foreign goods.
