A nation's foreign exchange reserves consist mainly of
A) excess reserves held by its banks.
B) government securities of that nation.
C) the legal currency of that nation.
D) currencies of other nations.
D
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The manager of a large luxury hotel chain is currently negotiating a four year contract with a linens supplier. The linens company will supply fresh laundered bedding and towels to the hotel over a four year period; however, the hotel chain can ends its contract with the linens company at the end of the first, second, or third years if the linens company does not supply quality linens. What can
the manager of the hotel chain do to avoid the end-game problem? A) Pay the linens company in full at the beginning of the first year. B) Pay the linens company one half of the contract amount after the first year and the remaining half after the second year. C) Pay the linens company in full after the first year. D) Offer to renew the contract if the linens company provides quality linens all four years.
When the Fed unexpectedly increases the money supply, it will cause an increase in aggregate demand because
a. lower interest rates will stimulate business investment and consumer purchases. b. real interest rates will fall, causing the dollar to depreciate and net exports to rise. c. lower interest rates will cause the value of assets (for example, stocks) to rise. d. all of the above are correct.
A positive income elasticity of demand coefficient indicates that:
A. two products are complementary goods. B. two products are substitute goods. C. a product is a normal good. D. a product is an inferior good.
When the price of a good that a person is consuming falls, other things being constant, there is
A) a decline in real income. B) a decline in purchasing power. C) a real income effect. D) no change in purchasing power.