Explain how the money markets of two countries are linked through the foreign exchange market
What will be an ideal response?
The monetary policy actions by the Fed affect the U.S. interest rate, changing the dollar/euro exchange rate that clears the foreign exchange market. The European System of Central Banks (ESCB) can affect the exchange rate by changing the European money supply and interest rate.
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The basic equation for a bank’s balance sheet is ____.
A. assets = liabilities ? net worth B. net worth = assets ? liabilities C. net worth = assets + liabilities D. liabilities = net worth + assets
All possible efficient allocations of 2 goods between 2 people are located on
A) the indifference curve. B) the contract curve. C) the production possibilities frontier. D) the budget line.
Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The unemployment rate is approximately:
a. 10 percent. b. 12 percent. c. 17 percent. d. 20 percent. e. 25 percent.
The French economist Jean-Baptiste Say transformed the equality of total output and total spending into a law that can be expressed as follows:
A. Unemployment is not possible in the short run. B. Demand and supply are never equal. C. Supply creates its own demand. D. Demand creates its own supply.