Russia borrowed funds from the International Monetary Fund in 1989 in exchange for agreeing to undertake certain changes. However, after receiving the funds, Russia spent the funds on other things, making the loan repayment more unlikely to occur. This situation is referred to as
A. moral hazard.
B. adverse selection.
C. deceptive knowledge.
D. asymmetric information.
Answer: A
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If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is
A) that there is no change in the quantity of money. B) much larger than if the securities were sold to a bank. C) much smaller than if the securities were sold to a bank. D) the same as if the securities were sold to a bank. E) None of the above answers is correct.
If the Fed bases its monetary policy on judgments of its policymakers about the current needs of the economy, it is following
A) discretionary policy. B) a money targeting rule. C) an inflation targeting rule. D) wait-and-see policy. E) a monetary base instrument rule.
Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others
Indicate whether the statement is true or false
Under a gold standard, countries should
A) keep the supply of their domestic money constant. B) keep the supply of their domestic money fixed in proportion to their gold holdings. C) keep the supply of foreign exchange less than their domestic money supply. D) restrict the demand for foreign goods. E) outlaw speculation.