Economics of Money, Banking and Financial Markets 12th edition by Frederic Mishkin Test bank
AACSB: Reflective Thinking
25) When a budget deficit occurs in the United States, the U.S. Treasury finances this deficit by
A) borrowing.
B) imposing a moratorium of new government spending.
C) increasing the tax rate.
D) printing more dollars.
Answer: A
Ques Status: Previous Edition
AACSB: Application of Knowledge
26) What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?
Answer: During a recession, output declines and unemployment increases. Prior to almost every recession in the U.S. the money growth rate has declined, however, not every decline is followed by a recession.
Ques Status: Previous Edition
AACSB: Reflective Thinking
1.4 Why Study International Finance?
1) American companies can borrow funds
A) only in U.S. financial markets.
B) only in foreign financial markets.
C) in both U.S. and foreign financial markets.
D) only from the U.S. government.
Answer: C
Ques Status: Previous Edition
AACSB: Diverse and Multicultural Work Environments
2) The price of one country's currency in terms of another country's currency is called the
A) exchange rate.
B) interest rate.
C) Dow Jones industrial average.
D) prime rate.
Answer: A
Ques Status: Previous Edition
AACSB: Application of Knowledge
3) The market where one currency is converted into another currency is called the ________ market.
A) stock
B) bond
C) derivatives
D) foreign exchange
Answer: D
Ques Status: Previous Edition
AACSB: Application of Knowledge
4) Everything else constant, a stronger dollar will mean that
A) vacationing in England becomes more expensive.
B) vacationing in England becomes less expensive.
C) French cheese becomes more expensive.
D) Japanese cars become more expensive.
Answer: B
Ques Status: Previous Edition
AACSB: Analytical Thinking
5) Which of the following is most likely to result from a stronger dollar?
A) U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them.
B) U.S. goods exported aboard will cost more in foreign countries and so foreigners will buy more of them.
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.
Answer: C
Ques Status: Previous Edition
AACSB: Diverse and Multicultural Work Environments
6) Everything else held constant, a weaker dollar will likely hurt
A) textile exporters in South Carolina.
B) wheat farmers in Montana that sell domestically.
C) automobile manufacturers in Michigan that use domestically produced inputs.
D) furniture importers in California.
Answer: D
Ques Status: Previous Edition
AACSB: Diverse and Multicultural Work Environments
7) Everything else held constant, a stronger dollar benefits ________ and hurts ________.
A) American businesses; American consumers
B) American businesses; foreign businesses
C) American consumers; American businesses
D) foreign businesses; American consumers