Assume that the reserve—deposit ratio is 0.2. The Federal Reserve carries out open-market operations, purchasing $1,000,000 worth of bonds from banks. This action increased the money supply by $2,600,000. What is the currency—deposit ratio?
A) 0.2
B) 0.3
C) 0.4
D) 0.5
B
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Consider the two graphs above. Suppose that firms are able to use inventories as collateral for low-interest loans. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
If the economy is in equilibrium, it must be
a. on the 45° line. b. on the 60° line. c. below the 45° line. d. below the 60° line.
Which of the following helps low-income countries grow rapidly relative to high-income countries?
A. Low-income countries are in a better position to save a larger share of their income. B. Low-income countries can employ technologies and practices that have been successful in high-income countries. C. Low-income countries generally have legal systems that protect property rights and enforce contracts in a more evenhanded manner. D. Low-income countries generally have more favorable weather conditions.
Which of the following statements is TRUE about the role that service exports and imports have in the balance of payments?
A. Service exports and imports are included in the balance of payments in the labor account. B. Service exports and imports are included in the balance of payments in the current account. C. Service exports and imports are included in the balance of payments in the official reserve transactions account. D. Service exports and imports are not included in the balance of payments because it is impossible to transport a service to another country.