Suppose the required reserve ratio is 5%. If banks are conservative and choose not to loan all of their excess reserves, the actual money multiplier is
A) less than 20.
B) greater than 20.
C) equal to 20
D) equal to 5.
A
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Which of the following are TRUE for discount bonds?
A) A discount bond is bought at par. B) The purchaser receives the face value of the bond at the maturity date. C) U.S. Treasury bonds and notes are examples of discount bonds. D) The purchaser receives the par value at maturity plus any capital gains.
Suppose that you borrow $10,000 for one year, and at the end of the year, you must repay $10,450. The interest rate is
A) 14.5 percent. B) 8.0 percent. C) 4.5 percent. D) 2.7 percent.
Mention some of the ways in which the problem of asymmetric information can be reduced
Which of the following would be most likely to encourage capital formation in a less-developed country?
a. the expectation of sustained high inflation b. the expectation that property rights will be highly secure in the years ahead c. the imposition of high tariffs and other restraints limiting imports d. higher personal and corporate tax rates