Which of the following is least likely to result in inflation?
a. A drought in California that causes farm production to fall.
b. The government printing money to finance deficits.
c. A reduction in consumer confidence.
d. Rising instability in oil-producing nations.
Ans: c. A reduction in consumer confidence.
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If the Fed buys government securities from the non-bank public, then
A) reserves at banks decrease. B) deposits at banks increase and banks' reserves increase. C) deposits at banks increase and banks' reserves decrease. D) loans at banks decrease. E) deposits at banks decrease and banks' reserves increase.
If the implied exchange rate between Big Mac prices in the United States and the Philippines is 68 pesos per dollar, but the actual exchange rate between the United States and the Philippines is 43 pesos per dollar, which of the following would you
expect to see? A) a depreciation of the dollar B) an increase in the demand for dollars C) an appreciation of the Philippine pesos D) a decrease in the demand for dollars
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). d. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If total deposits at Last Bank and Trust are $100 million, total loans are $70 million, and excess reserves are $20 million, then which of the following is the required reserve ratio?
A. 70 percent. B. 30 percent. C. 20 percent. D. 10 percent.