=========================preview======================
(ECON333)Econ333PracticeMidterm08.pdf
Back to ECON333 Login to download
======================================================
Name _____________________

Student ID _____________________

Midterm Exam
Economics 333
Money and Banking
Thursday, October 18th

The exam is scheduled for 1 hour and 20 minutes from 9-10:20. Write all answers on this exam paper. Do not hand in your blue books. Total 60 points.

Multiple Choice (3 points each)

1.
Which of the following events would be the most likely to lead to an increase in discount window borrowing in Hong Kong


a.
An increase in the U.S. Fed Funds rate


b.
A decrease in the US Fed Funds rate


c.
A sudden large sale of Hong Kong dollars by hedge funds.


d.
An expected appreciation of the Hong Kong dollar.



________________


2.
The bond traders of the US Federal reserve may engage in an open market sale of government bonds as


a.
dynamic transactions to reduce the interest rate or defensive transactions in response to an increase in the demand for reserves


b.
dynamic transactions to reduce the interest rate or defensive transactions in response to a decrease in the demand for reserves


c.
dynamic transactions to increase the interest rate or defensive transactions in response to an increase in the demand for reserves


d.
dynamic transactions to increase the interest rate or defensive transactions in response to a decrease in the demand for reserves





________________

Please write your answers on this exam paper.



3.
Which of the following is not a part of M2 in Hong Kong?


a.
Time deposits at commercial banks with maturities greater than 1 year


b.
Checking deposits at commercial banks


c.
Exchange Fund Bills held by banks


d.
Currency in Circulation





________________

4.
We observe inflation rates rise by 1%. According to the Taylor rule, we should expect a:


a.
Increase in the Fed Funds Rate of 1.%.


b.
Increase in the Fed Funds Rate of .%.


c.
Decrease in the Fed Funds Rate of .%.


d.
Decrease in the Fed Funds Rate of 1.%.





________________


5.
The following events will change the currency to deposit ratio. Which of them will reduce the money multiplier?


a.
the fear of crises in the banking system declines.


b.
the expected return on bank deposits rises.


c.
the local banking system implements a debit card payment system.


d.
the level of underground activity increases.





________________

Please write your answers on this exam paper.



6.
Which of the following statements (choose one) is a true description of a difference between the operation of the Hong Kong central bank and the operation of the Federal Reserves:


a.
A major asset of the Federal Reserve is US government bonds; a major asset of the HKMA is Hong Kong government bonds.


b.
A major liability of the Federal Reserve is US government bonds; a major asset of the HKM