1. The federal funds rate is: a) the rate at which the Fed lends money to commercial banks b) the rate at which consumers borrow money form commercial banks c) the rate at which one commercial bank borrows money from another commercial bank d) the rate at which investors borrow money from the Fed
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1. The federal funds rate is:
a) the rate at which the Fed lends money to commercial banks
b) the rate at which consumers borrow money form commercial banks
c) the rate at which one commercial bank borrows money from another commercial bank
d) the rate at which investors borrow money from the Fed
2. Which of the following statement is true?
a) Investment tax incentive increases investment, which increases productivity growth and living standards in the long run.
b) Budget deficit reduces investment, which reduces productivity growth and living standards.
c) Both investment tax incentive and budget deficit causes net exports to fall
d) all of the above
3. Which of the following caused a
a) Although national saving increased in the 1990s, investment increased even at a faster rate.
b) Slowdown in national savings but a rapid increase in investment.
c) Huge government deficit.
d) An increase in government spending.
4. Let the govt. removed previous tax incentive for investment. What kind of effect will this have on the real interest rate?
a) The real interest rate will remain unaffected.
b) The real interest rate will increase.
c) The real interest rate will decrease.
d) No effect.
5. Following the previous question, what kind of effect will this have on the real exchange rate?
a) The real exchange rate will appreciate
b) The real exchange rate will depreciate
c) The real exchange rate will be fluctuating up and down.
d) Cannot be determined from the given information
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