Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and current international transactions become more negative (or less positive).
b. Real GDP rises, and current international transactions become more negative (or less positive).
c. Real GDP falls, and current international transactions rises.
d. Real GDP rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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Large fluctuations in money supply growth and smaller fluctuations in the federal funds rate between October 1982 and the early 1990s indicate that the Fed had shifted to ________ as an operating target
A) borrowed reserves B) nonborrowed reserves C) excess reserves D) required reserves
In its function of controlling the money supply, the Fed does which one of the following?
a. Controls the money supply. b. Clears checks. c. Regulates banks. d. Holds gold belonging to foreign governments. e. All of these.
Which of the following items is included in the calculations of the financial account in the U.S. balance of payments?
a. the value of U.S. stocks at year end b. the purchases of U.S. stocks during the year c. the dividends paid by U.S. stock issuers at year end d. the income received from U.S. stocks during the year
A change in Federal Reserve monetary policy will:
A. have no effect on the Security Market Line. B. invert the Security Market Line. C. change the slope of the Security Market Line. D. cause a vertical shift of the Security Market Line.