31.Basic approaches to forecasting interest rates include
c.both of the above
d.none of the above
32.Economic models predict interest rates by estimating the statistical relationships between the and the resulting .
a.level of interest rates; measures of economic output
b.past level of interest rates; future level of interest rates
c.measures of economic output; level of interest rates
d. prior level of GNP; future level of interest rates
33.The Federal Reserve Bank of St. Louis develops quarterly forecasts of a number of key economic statistics using only eight equations. The is an example of
a.a naive forecasting model.
b.the flow of funds approach.
c.a hedged forecast.
d.an economic forecasting model.
34.The flow of funds approach to interest rate forecasting is associated with all but one of the following:
a.the National Income Accounts.
b.the Flow of Funds Accounts.
c.the loanable funds theory of interest
d.the Federal Reserve System.
35.Which of the following best explains why public interest rate forecasts have a low rate of accuracy?
a.Accurate forecasters do not make their forecasts public.
b.Reasonably efficient financial markets preclude a forecaster from consistently outguessing the direction of interest rates.
c.The level of training of forecasters is lagging an evermore sophisticated economy.
d.(a) and (b) above
36.Which of the following is best associated with interest rate movements and inflation?
a.Interest rates move inversely with inflation.
b.Interest rates vary directly with expected inflation.
c.Interest rates vary directly with past inflation rates.
d.Inflation is impacted by expected interest rates.
37.A decrease in the money stock by the Federal Reserve
a.shifts the supply of loanable funds to the left, decreasing interest rates.
b.shifts the demand for loanable funds to the left, increasing interest rates.
c.shifts the supply of loanable funds to the left, increasing interest rates.
d.shifts the supply of loanable funds to the right, increasing interest rates.
38.On any given day if the market interest rate is above the equilibrium interest rate level,
a.the Fed will declare a monetary policy.
b.there will be a shortage of loanable funds and interest rates will increase.
c.there will be a surplus of loanable funds at that rate and rates will decline to the equilibrium rate.
d.there will be a shortage of loanable funds at that rate and rates will increase to the equilibrium rate.
39.The lower a consumer's positive time preference for consumption,
a.the more savings they will accumulate.
b.the lower the level of interest rates.
c.the greater the supply of loanable funds.
d.all of the above.
40.A person with a very high positive time preference for consumption
a.will have a high savings rate.
b.will have a low savings rate.
c.prefers savings to consumption.
d.is not as likely to borrow money as other people with lower positive time preference.