Central banks intervene directly in foreign exchange markets by buying and selling ________
A) exports and imports
B) foreign currencies
C) U.S. government debt
D) discount loans
B
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In a study published in 1963, Milton Friedman and Anna Schwartz found that in every business cycle they studied over nearly a hundred-year period
A) the growth rate of the money supply decreased before output decreased. B) interest rates decreased before output decreased. C) the growth rate of federal government spending decreased before output decreased. D) the growth rate of state and local government spending decreased before output decreased.
According to the Quantity Theory of Money (Chapter 3), the increase in the money supply from $39.7 billion in 1940 to $99.2 billion in 1945 should have fueled strong inflation. However, it did not because
(a) the World War II (1941–45) (WWII) economy was operating below full employment levels of production. (b) the WWII economy was operating at full employment levels of production. (c) the WWII economy was operating above full employment levels of production. (d) price controls prevented the surge in prices across the economy.
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Indicate whether the statement is true or false
Is it correct to say that if the total balance of payments does not equal zero, then the reserves account will automatically adjust to ensure it equals zero
a. Yes. b. No. c. The answer is "maybe" because it always depends on the circumstances.