Exhibit 21-5 International currency markets
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Exhibit 21-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The demand curve in graph 15-5(A) is determined by:
A. U.S. citizens attempting to purchase Japanese-made goods.
B. Japanese attempting to purchase U.S.-made goods.
C. U.S. businesses attempting to sell to the Japanese.
D. Japanese businesses attempting to sell to the U.S.
Answer: B
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If a firm is a price taker, then the demand curve it faces is perfectly
a. elastic and above its marginal revenue curve b. elastic and lies on top of its marginal revenue curve c. elastic and below its marginal revenue curve d. inelastic and above its marginal revenue curve e. inelastic and the same as its marginal revenue curve
The ECB, like the U.S. Federal Reserve, is ______, and unlike the U.S. Federal Reserve, is not ______.
A) independent; a lender of last resort B) subject to scrutiny by the legislature; able to lend to large corporations C) dependent on congressional approval for its policies; committed to price stability D) able to lend to member governments; able to lend directly to banks
Refer to Table 9-5. If the required reserve ratio is 10% and the market interest rate is 8%, what is Bolton Bank's opportunity cost of holding the excess reserves it is currently holding?
A) $5.6 million B) $3.2 million C) $0.8 million D) 0; Bolton Bank has no excess reserves.
The real-income effect is typically small because
A. the change in price of one particular item has little effect on total purchasing power. B. income has no relation to consumption. C. real-incomes are always rising. D. price changes tend to balance out over time.