Over the past 25 years, child mortality has ________ and literacy has ________ in developing countries.
A. fallen; fallen
B. risen; risen
C. fallen; risen
D. risen; fallen
Answer: C
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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical limit, the money supply could
A) decrease by $5 billion. B) increase by $5 billion. C) increase by $20 billion. D) decrease by $20 billion.
Everything else held constant, if a central bank makes an unsterilized ________ of foreign assets, then the domestic money supply will ________ and the domestic currency will depreciate
A) purchase; increase B) purchase; decrease C) sale; increase D) sale; decrease
Why are real interest rates more important than nominal interest rates with regard to analyzing the supply and demand of loanable funds?
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The GDP Price Index rises, and nominal value of the domestic currency falls. b. The GDP Price Index falls, and nominal value of the domestic currency rises. c. The GDP Price Index rises, and nominal value of the domestic currency remains the same. d. The GDP Price Index rises, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.