If the Fed were to enter the foreign exchange market and purchase euros, the impact on domestic banking reserves would be:
A. domestic banking reserves would decrease.
B. the same as it would be with an open market purchase.
C. the opposite of what it would be with an open market purchase.
D. uncertain.
Answer: B
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What will be an ideal response?
The second largest source of income for the federal budget is
A. personal income taxes. B. corporate income taxes. C. payroll taxes. D. inheritance taxes.
The demand for an input will be more inelastic when
A) the demand for the product being produced is elastic. B) the cost of the input is a relatively large percentage of total production costs. C) the time period being considered is relatively long. D) it is difficult to substitute other inputs for this input.
If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.25, the deposits are ________ and the money supply is ________.
A. 200; 600 B. 600; 1,000 C. 800; 1,200 D. 400; 800