Which of the following has NOT been a criticism of the "convergence process" for joining the Eurozone?
A) Although challenging, the process fully transforms inflation-biased nations into fiscal and monetary conservatives.
B) Policies forced on applicants to monetary union are politically costly, so the interim peg may not be fully credible and may generate exchange rate crises.
C) The fiscal rules are seen as inflexible and arbitrary.
D) Once a nation has met the criteria, its commitment to fiscal discipline may wane.
Ans: A) Although challenging, the process fully transforms inflation-biased nations into fiscal and monetary conservatives.
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Expansionary fiscal policy in an open economy
A. leads to a balance of trade surplus. B. decreases America’s capital account surplus and the current account deficit by the same amount. C. increases both America’s capital account surplus and current account deficit by equal amounts. D. increases America’s capital account surplus more than it increases the current account deficit.
Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?
A) The quantity of loanable funds being demanded in the market is less than $90 million. B) The loanable funds market is in equilibrium. C) There is a surplus of loanable funds in the market. D) There is a shortage of loanable funds in the market.
According to The Economist magazine's Big Mac index, one of the most overvalued currencies as of July 2008 was the Norwegian kroner. Which of the following is a likely implication of that fact?
A) That goods and services are more expensive in Norway than in the U.S. B) That the Norwegian currency is going to be undervalued in the near future. C) That the Norwegian currency is likely to appreciate in the near future. D) That the Norwegian government is running a large deficit.
Answer the following statements true (T) or false (F)
1. Share draft accounts at credit unions are a type of transaction account. 2. Reserve requirements on non personal time deposits cannot exceed 9 percent. 3. It is possible for the economy to still experience an increase in the money supply when the Fed increases the reserve requirement. 4. Interest rate ceilings were phased out by the Depository Institutions Deregulation and Monetary Control Act of 1980. 5. The Federal Reserve today no longer has control over stock market margins requirements.