Consider a country that has an official settlements balance surplus and is experiencing upward pressure on the exchange-rate value of its currency. Which of the following will NOT be true in this context?
A. For the regular bank that is involved in the intervention transaction, the central bank decreases the bank's deposits at the central bank.
B. The central bank of this country must intervene to buy foreign currency and sell domestic currency.
C. Its balance sheet will show an increase in official international reserve holdings.
D. Its balance sheet will show an increase in its liabilities.
Answer: A
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A) increase; permanently B) increase; temporarily C) decrease; temporarily D) decrease; permanently
Which of the following is a transfer payment? I. Social Security II. Unemployment benefits
A) I only B) II only C) Both I and II D) Neither I nor II
Other things the same, which of the following responses would we expect to result from a decrease in U.S. interest rates?
a. U.S. citizens decide to hold more foreign bonds. b. People choose to hold more currency. c. You decide to purchase a new oven for your cookie factory. d. All of the above are correct.
Which of the following is NOT included in the MZM definition of money?
A) currency.
B) money market funds.
C) travelers checks.
D) small-denomination time deposits.