1. The importance of the bank lending transmission mechanism of monetary policy:
a- should continue to grow in importance.
b- has always been the weakest of all of the mechanisms.
c- has decreased over the past twenty years.
d- has increased over the past twenty years.
2. The bank-lending channel of monetary policy focuses on:
a- the banks' willingness and ability to lend.
b- the interest rate banks charge their largest customer.
c- the deposit insurance premiums banks will end up paying.
d- how central bank policy influences the solvency of banks.
3. Decreases in the real interest rate will result in a(n):
a- increase in net exports because it will lead to a depreciation of the dollar.
b- decrease in net exports because it will lead to an appreciation of the dollar.
c- increase in net exports because it will lead to an appreciation of the dollar.
d- decrease in net exports because it will lead to a depreciation of the dollar.
4. If a borrower's net worth increases:
a- the borrowers are likely to want to take less risk.
b- the likelihood of moral hazard also increases.
c- the supply of loans decreases.
d- the moral hazard risk for the potential lenders decreases.
5. Increases in the real interest rate will result in a(n):
a- decrease in net exports because it will lead to an appreciation of the dollar.
b- increase in net exports because it will lead to a depreciation of the dollar.
c- decrease in net exports because it will lead to a depreciation of the dollar.
d- increase in net exports because it will lead to an appreciation of the dollar.