An open-market purchase of foreign bonds to increase a central bank's international reserves:
A. increases the central bank's liabilities and decreases its assets.
B. increases the central bank's liabilities and assets.
C. decreases the central bank's assets and liabilities.
D. increases the central bank's assets but decreases its liabilities.
Answer: B
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The four categories of final users of GDP are:
A. businesses, firms, governments, and the foreign sector. B. households, firms, governments, and the foreign sector. C. businesses, corporations, firms, and farms. D. households, the Federal Reserve, governments, and the foreign sector.
Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals ________, while your deposit in Bank S equals ________.
A. $1,791; $2,000 B. $1,600; $2,594 C. $1,600; $2,000 D. $1,060; $1,100
In an economy where aggregate spending is given by Y = 3,000 + .75Y - 10,000 r, the central bank is currently setting the interest rate at 0.05 (5 percent). If potential output equals 10,800, the central bank must ________ the interest rate to close the ________ gap.
A. lower; recessionary B. raise; recessionary C. raise; expansionary D. lower; expansionary
Refer to the scenario above. What is likely to be the impact on Firm B's sales if Firm A decides to sponsor the event while Firm B decides not to sponsor the event?
A) A 0% increase in sales B) A 7% increase in sales C) A 5% increase in sales D) A 10% increase in sales