The primary purpose of meetings of the fome is to:
A. set the required reserve rate.
B. set the discount rate.
C. set the prime rate.
D. decide on how to influence financial conditions.
Answer: D
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Bobby is offered a job as a salesperson in which there is a 50 percent chance that he will make $2,000 and a 50 percent chance that he will make $10,000. Bobby's utility of wealth curve is shown in the figure above. What is Bobby's cost of risk?
A) $1,000 B) $2,000 C) $3,000 D) $4,000
Everything else held constant, if a central bank makes an unsterilized ________ of foreign assets, then the domestic money supply will increase and the domestic currency will ________
A) purchase; appreciate B) purchase; depreciate C) sale; appreciate D) sale; depreciate
The crowding-out effect implies that a
a. budget surplus will be highly effective against inflation. b. budget deficit is likely to stimulate aggregate demand and cause inflation. c. budget deficit will increase real interest rates and, thereby, retard private spending. d. budget surplus will retard aggregate demand and throw the economy into a downward spiral.
In 2004, retailers and exporters in the United States were happy, as were their customers from abroad, due to:
a. a reduction in import tariffs by the EU. b. the lifting of an embargo on U.S. exports to Germany. c. the high value of the U.S. dollar compared to other currencies. d. the low value of the U.S. dollar compared to other currencies.