Question 1

Real interest rates have a greater impact on investment the nominal rates.

Accepted Answer

A) True 
 B)False  True

Question 2

If a firm's q value is low, they would be more likely to

Accepted Answer

A)   sell their own stock.
B)   buy bonds.
C)   invest in new projects.
D)   all of the above.E) All of the above
F) B) and C)

Question 3

What is the difference between reduced form and structural models in terms of transmission mechanisms?

Accepted Answer

Structural models identify tra...

Question 4

The market value of a company divided by the cost of its physical capital is called

Accepted Answer

A)   net worth.
B)   Tobin's q.
C)   cash flow.
D)   none of the above.E) B) and C)
F) A) and B)

Question 5

EMP causes a country's currency to appreciate, which is part of the _____ for monetary policy.

Accepted Answer

A)   interest rate
B)   wealth
C)   credit
D)   fiscalE) None of the above
F) A) and B)

Question 6

Mitigating asymmetric information problems is NOT an important part of which of the following channels for expansionary monetary policy?

Accepted Answer

A)   net exports
B)   home prices
C)   firm cash flow
D)   all of the aboveE) B) and C)
F) None of the above

Question 7

Early Keynesians found little evidence that monetary policy had little effect on business investment.

Accepted Answer

A) True 
 B)False

Question 8

The effect of EMP on firm cash flow affects the economy primarily through consumption.

Accepted Answer

A) True 
 B)False  False

Question 9

"There are more fights in bars, so hostility causes drinking." What is the flaw in this argument?

Accepted Answer

Drinking c...

Question 10

Which of the following is increased by EMP?

Accepted Answer

A)   interest rates
B)   Tobin's q
C)   asymmetric information problems
D)   all of the aboveE) B) and C)
F) C) and D)

Question 11

To avoid deflation, a central bank should

Accepted Answer

A)   decrease the money supply.
B)   decrease inflation.
C)   keep real interest rates below nominal rates.
D)   all of the aboveE) B) and C)
F) All of the above

Question 12

Economists turn to history for natural experiments.

Accepted Answer

A) True 
 B)False

Question 13

The transmission mechanisms for monetary policy are

Accepted Answer

A)   structural models.
B)   reduced form models.
C)   both of the above.
D)   neither of the above.E) C) and D)
F) None of the above

Question 14

The transmission mechanism for monetary policy involving the net worth of firms is part of the _____ of money supply changes.

Accepted Answer

A)   wealth effect
B)   credit view
C)   real interest rate effect
D)   none of the aboveE) None of the above
F) A) and B)

Question 15

Only statistical and historical evidence strengthen researchers' belief in causation.

Accepted Answer

A) True 
 B)False

Question 16

The effect of EMP on Tobin's q affects the economy primarily through firm investment.

Accepted Answer

A) True 
 B)False

Question 17

What mistake of the Fed during the Great Depression did the Bank of Japan repeat in the 1990s?

Accepted Answer

They both allowed deflation (a...

Question 18

Timing evidence detailed in showed that the money only affected prices, not real GDP.

Accepted Answer

A) True 
 B)False

Question 19

Historical evidence from the Great Depression shows that money was neutral.

Accepted Answer

A) True 
 B)False

Question 20

What other factors should policy makers consider more than just short-term interest rates?

Accepted Answer

Policy makers should consider real interest rates, unexpected changes in price level, interest rates on risky bonds, prices of other assets, the quantity of bank loans, adverse section, moral hazard, and the principal-agent problem.

Exam 24: Monetary Policy Transmission Mechanisms

Real interest rates have a greater impact on investment the nominal rates.

Correct AnswerverifiedTrue

If a firm's q value is low, they would be more likely to

Correct AnswerverifiedShow Answer

What is the difference between reduced form and structural models in terms of transmission mechanisms?

Correct AnswerverifiedStructural models identify tra...View AnswerShow Answer

The market value of a company divided by the cost of its physical capital is called

Correct AnswerverifiedShow Answer

EMP causes a country's currency to appreciate, which is part of the _____ for monetary policy.

Correct AnswerverifiedShow Answer

Mitigating asymmetric information problems is NOT an important part of which of the following channels for expansionary monetary policy?

Correct AnswerverifiedShow Answer

Early Keynesians found little evidence that monetary policy had little effect on business investment.

Correct AnswerverifiedShow Answer

The effect of EMP on firm cash flow affects the economy primarily through consumption.

Correct AnswerverifiedFalse

"There are more fights in bars, so hostility causes drinking." What is the flaw in this argument?

Correct AnswerverifiedDrinking c...View AnswerShow Answer

Which of the following is increased by EMP?

Correct AnswerverifiedShow Answer

To avoid deflation, a central bank should

Correct AnswerverifiedShow Answer

Economists turn to history for natural experiments.

Correct AnswerverifiedShow Answer

The transmission mechanisms for monetary policy are

Correct AnswerverifiedShow Answer

The transmission mechanism for monetary policy involving the net worth of firms is part of the _____ of money supply changes.

Correct AnswerverifiedShow Answer

Only statistical and historical evidence strengthen researchers' belief in causation.

Correct AnswerverifiedShow Answer

The effect of EMP on Tobin's q affects the economy primarily through firm investment.

Correct AnswerverifiedShow Answer

What mistake of the Fed during the Great Depression did the Bank of Japan repeat in the 1990s?

Correct AnswerverifiedThey both allowed deflation (a...View AnswerShow Answer

Timing evidence detailed in showed that the money only affected prices, not real GDP.

Correct AnswerverifiedShow Answer

Historical evidence from the Great Depression shows that money was neutral.

Correct AnswerverifiedShow Answer

What other factors should policy makers consider more than just short-term interest rates?

Correct AnswerverifiedPolicy makers should consider real interest rates, unexpected changes in price level, interest rates on risky bonds, prices of other assets, the quantity of bank loans, adverse section, moral hazard, and the principal-agent problem.

Correct Answer
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True

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Structural models identify tra...
View Answer

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False

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Drinking c...
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Correct Answer
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Correct Answer
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They both allowed deflation (a...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Policy makers should consider real interest rates, unexpected changes in price level, interest rates on risky bonds, prices of other assets, the quantity of bank loans, adverse section, moral hazard, and the principal-agent problem.