The Hong Kong dollar is pegged to the U.S. dollar at a rate of 7.8 Hong Kong dollars to 1 U.S. dollar. Suppose the central bank of Hong Kong changes the exchange value to 7.3 Hong Kong dollars to one U.S. dollar. Which of the following is most likely to be true in this context?
A. The Hong Kong dollar has been devalued by 0.5 percent.
B. The Hong Kong dollar has been devalued by 6.2 percent.
C. The Hong Kong dollar has been revalued by 6.4 percent.
D. The Hong Kong dollar has been revalued by 0.5 percent.
Answer: C
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The average output produced per worker is one way of measuring
A) inflation. B) the interest rate. C) employment. D) productivity.
Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000 . How much does this bank now have to lend out if it decides to hold only required reserves?
a. $27,000 b. $27,190 c. $26,190 d. $9,000
The model: yt = 
0 +
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yt - 1+ 
1zt -1 +vt, where vt = ut- ut -1 represents a:
A. finite distributed lag model.
B. simultaneous equations model.
C. rational distributed lag model.
D. vector error correction model.