Suppose Kaylee withdraws $4,000 from her bank. If the reserve ratio is 25 percent, then this will lead to a decrease in M1 of:
A. $1,000.
B. $4,000.
C. $8,000.
D. $12,000.
Answer: D
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Being a member of a cartel is similar to being in a Prisoner's Dilemma situation because
a. each firm is being held hostage by the decisions of the other firms. b. of anti-trust laws which make price fixing a criminal offense. c. to obtain the best possible outcome for all, an enforcement mechanism is needed. d. of the presence of organized crime in industries with cartels.
An increase in taxes will ________ consumption spending, and a decrease in transfer payments will ________ consumption spending
A) decrease; increase B) decrease; decrease C) increase; decrease D) increase; increase
Which of the following factors would increase capital mobility?
a. fixed exchange rates. b. differences in tax laws between countries. c. different accounting standards between countries. d. both a and b. e. All of the above.
If the spot price of the euro is $1.10 per euro and the 30-day forward rate is $1.00 per euro, and you believe that the spot rate in 30 days will be $1.05 per euro, then you can try to maximize speculative gains by
A. buying euros in the current spot market and selling euros in 30 days at the future spot rate. B. signing a forward foreign exchange contract to sell dollars in 30 days. C. signing a forward foreign exchange contract to sell euros in 30 days. D. buying dollars in the spot market and selling the dollars in 30 days at the future spot rate.