An increase in the real interest rate in the United States will cause net capital outflows to ________ and cause the dollar to ________ relative to other currencies
A) increase; appreciate
B) increase; depreciate
C) decrease; appreciate
D) decrease; depreciate
C
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Based on the above table, an open market operation in which the Fed purchased $100,000 of government securities would
A) lead to a maximum potential expansion of the money supply of $1 million. B) create a reserve deficiency for the banking system. C) cause demand deposits to fall by $100,000. D) lead to a maximum potential expansion of the money supply of $100,000.
U.S. prices are considered stable only when the Consumer Price Index
a. falls. b. moves 10 percent or less in a year’s time. c. moves 2 percent or less in a year’s time. d. remains unchanged.
Now suppose competition among several market makers forces the spread down to $4 . How many goods are traded?
a. Four b. Five c. Six d. Seven
If people held all their money as cash:
A. money would lose its value as a store of wealth. B. money would no longer be a financial liability of the Fed. C. banks could not create money. D. banks would still be able to create money by making loans.