the economics of money, banking, and financial markets

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8. 
   

   A contractionary monetary policy raises the real interest rate, causing the domestic currency to
   ____, thereby ____ net exports.
   A) appreciate; raising
   B) appreciate; lowering
   C) depreciate; raising
   D) depreciate; lowering
   Answer: B
   Diff: 2 Type: MC Page Ref: 639
   Skill: Recall
   Objective List: 27.1 Outline the transmission mechanisms of monetary policy

   
   


9. 
   

   A contractionary monetary policy decreases net exports by ____ interest rates and
   ____ the value of the dollar.
   A) lowering real; decreasing
   B) lowering real; increasing
   C) raising nominal; increasing
   D) raising real; increasing
   Answer: D
   Diff: 2 Type: MC Page Ref: 639
   Skill: Recall
   Objective List: 27.1 Outline the transmission mechanisms of monetary policy

   
   


10. 
    

    Tobin's q is defined as the market value of firms ____ the replacement cost of capital.
    A) times
    B) minus
    C) plus
    D) divided by
    Answer: D
    Diff: 2 Type: MC Page Ref: 641
    Skill: Recall
    Objective List: 27.1 Outline the transmission mechanisms of monetary policy

    
    


11. 
    

    Tobin's q theory suggests that monetary policy may affect investment spending through its
    impact on ____.
    A) stock prices
    B) interest rates
    C) bond prices
    D) cash flow
    Answer: A
    Diff: 2 Type: MC Page Ref: 641
    Skill: Recall
    Objective List: 27.1 Outline the transmission mechanisms of monetary policy