Given a required reserve ratio of 0.25, what is the maximum amount by which the money supply can increase in response to a $200 million increase in excess reserves for the whole banking system?
A. $800 million.
B. $200 million.
C. $500 million.
D. $250 million.
Answer: A
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Assume that the yen price of one U.S. dollar rises to 80 yen and that the Bank of Japan has a target exchange rate of 75 yen per dollar. As a result, the Bank of Japan will intervene in the foreign exchange market by:
a. selling U.S. dollars and buying yen. b. selling both U.S. dollars and yen. c. buying U.S. dollars and selling yen. d. buying both U.S. dollars and yen. e. buying U.S. Treasury securities.
Real interest rate will decrease if
What will be an ideal response?
Central bank independence refers to the central bank’s ability to make decisions without political interference.
Answer the following statement true (T) or false (F)
A simplified representation of a complicated situation is:
A. econometrics. B. cutting corners. C. useless without adding fine details. D. a model.