How does a bond sale by the Fed affect the money supply?
(A) The sale increases the money supply but not in the proportion that the multiplier effect would suggest.
(B) The sale increases the money supply.
(C) It does not affect the money supply.
(D) The sale decreases the money supply.
Answer: (D) The sale decreases the money supply.
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Which of the following would cause aggregate demand to decrease?
A) The government increases taxes on both business and personal income. B) A drop in the foreign exchange value of the dollar C) The Fed increases the amount of money in circulation. D) Businesses and households believe that the economy is headed for good times, so they begin to feel increased security about their jobs.
With panel data, the causal effect
A) cannot be estimated since correlation does not imply causation. B) is typically estimated using the probit regression model. C) can be estimated using the "differences-in-differences" estimator. D) can be estimated by looking at the difference between the treatment and the control group after the treatment has taken place.
If a bank has zero excess reserves and one of its creditworthy customers applies for a loan, the bank may be able to grant the loan if it can
A) apply some of its loan repayments to obtain the funds for the new loan. B) obtain extra funds in the federal funds market. C) obtain extra funds by borrowing from the Fed. D) any of the above E) b or c
The nominal exchange rate is the
a. nominal interest rate in one country divided by the nominal interest rate in the other country.
b. the ratio of a foreign country's interest rate to the domestic interest rate.
c. rate at which a person can trade the currency of one country for another.
d. the real exchange rate minus the inflation rate.