If a country's nominal interest rate is zero, then
A) the country's economy is in a liquidity trap.
B) exchange rates with other countries are likely to decline.
C) exchange rates with other countries are likely to increase.
D) monetary policy is likely to be very effective in stimulating the economy.
E) the country's economy has achieved monetary equilibrium.
A
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Answer the following statement true (T) or false (F)
A currency appreciation is a(n):
A. decrease in the value of a currency relative to other currencies. B. increase in the value of a currency relative to other currencies. C. increase in the official value of a currency in a fixed-exchange-rate system. D. reduction in the official value of a currency in a fixed-exchange-rate system.
With dollarization adopted by a country, the "seigniorage profit" from issuing currency in the country goes to a foreign government.
Answer the following statement true (T) or false (F)
Answer the following statements true (T) or false (F)
1) When the Fed raises the interest rate paid on reserves, it discourages bank lending. 2) When the Fed pays interest on reserves held at Fed banks, the interest rate used is the discount rate. 3) The prime interest rate and the federal funds rate normally change in opposite directions. 4) The largest single liability of the Federal Reserve Banks is their outstanding loans to commercial banks.