ECONOMICS 353 (SECTION 1) L. Tesfatsion/Spring 01
EXERCISE SET 9: 5 POINTS TOTAL DUE: Tuesday, April 17, 9:30 A.M.
*IMPORTANT REMINDER: LATE ASSIGNMENTS CANNOT BE ACCEPTED -- NO EXCEPTIONS*
*NOTE:* Please FILL IN YOUR NAME, BIRTH DATE, AND ID (SOC SEC) No. on Side 1
of a RED bubble (answer) sheet and write "353 SECTION 1-EXERCISE SET 9" in
the top margin of Side 1. Use a #2 pencil to MARK YOUR ANSWERS on Side 1 of
the bubble sheet to the following five multiple choice questions:
1-1 The "economic development" of a country refers to changes in __________
that permit higher standards of living for its people.
A. its national income.
B. its unemployment rate.
C C. its economic structure (infrastructure, organization, and governance).
D. the size of its economy, as measured by GDP.
E. all of the above.
2-1 The economic growth and development of a country are impeded when the
flow of funds from savers to borrowers is disrupted, which can result from
A. a weak legal system.
B. absence of standard accounting practices.
C. inadequate or inappropriate government regulation.
D D. all of the above.
E. only B and C.
3-1 According to Mishkin, most financial crises in the U.S. have begun with
A. a deterioration in banks' balance sheets.
B. a sharp rise in interest rates.
C. a steep stock market decline.
D. an increase in uncertainty resulting from a failure of a major
financial or non-financial firm.
E E. all of the above
4-1 According to the data on the Great Depression passed out in class, and
assuming the inflation rate was correctly expected, which of the following
factors could NOT have been key factors causing the prolonged and serious
nature of the financial crisis during the Great Depression:
A. a sharp contraction in the real interest rate during 1929--1933
B. a sharp contraction in the real money supply during 1929-1933
C. a decline in the aggregate price level during 1929--1933
D. all of the above
E E. only A and B.
5-1 According to Mishkin, basic ways in which the financial crisis in Mexico
during 1994-1995 DIFFERED from a typical financial crisis occurring in the U.S.
during the nineteenth and twentieth centuries include:
A. the crisis was partly precipitated by a decline in interest rates abroad.
B B. speculative currency attacks led to a foreign exchange crisis.
C. the financial crisis was partly precipitated by a rise in stock prices.
D. both A and C.
E. all of the above.
