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During recessions, it is common for imports to
increase because people buy more cheap foreign goods. True False
When the dollar increases relative to foreign
currencies, foreign goods become more expensive and consumers spend less money
High interest rates in the United States relative
to foreign interest rates have a tendency to attract foreign investors to the
U.S. money markets.
Federal Open Market Committee (FOMC) determines the monetary policy for the
U.S. economy. True False
Gross Domestic Product (GDP) measures only output
from U.S. factories and consumption within the United States.
Gross Domestic Product (GDP) measures the world
wide production of all U.S. companies, firms and enterprises.
41. Based on
all recessions since 1945, contractions of economic cycles lasted an average of
two years. True False
Expansions of economic activity during the eight
peace time business cycles from February 1945 to November of 2001 have averaged
approximately 63 months.
43. It is
estimated that the U.S. automobile industry accounts for more than 4 percent of
the GDP. True False
The Standard and Poor’s 500 Index had one of the
worst performance records in history between 2000 and the beginning of 2003.
Since the late 1980s, the Fed began to take a
balanced approach of controlling interest rates and money supply growth, rather
than focusing solely on the money supply.
The quantity theory of money states that as the
supply of money increases relative to the demand for money, people will make
adjustments in their portfolios of assets. First, they will buy bonds, stocks,
then real assets.
Technology companies such as Cisco, Oracle, IBM,
Intel and Sun Microsystems are somewhat cyclical in that they depend on high
volume to maintain profitability.
The Federal Reserve Bank’s buying and selling of
securities for its own portfolio is known as open market operations.
49. If the
Fed buys securities, the money supply goes down, along with interest rates.
The difference between GNP and GDP is that GDP
only measures output from U.S. factories and consumption in the U.S.
housing industry has historically done poorly during recessionary periods. True