Membership in the Federal Reserve System
A) is held by state-owned banks only.
B) is held collectively by all banks in the banking system.
C) is held by only a minority of banks in the banking system.
D) is held by banks that also have branches outside the United States.
Ans: C) is held by only a minority of banks in the banking system.
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An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend, everything else held constant
A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decrease
Loretta agrees to lend Ted $500,000 to buy computers for his consulting firm. They agree to a nominal interest rate of 8%. Both expect the inflation rate to be 2%
(a) Calculate the expected real interest rate. (b) If inflation turns out to be 3% over the life of the loan, what is the real interest rate? Who gains from unexpectedly high inflation, Loretta or Ted? (c) If inflation turns out to be 1% over the life of the loan, what is the real interest rate? Who gains from unexpectedly low inflation, Loretta or Ted?
A nation's trade deficit will tend to shrink when its
a. economy is expanding. b. economy is shrinking. c. investment environment is attractive to foreigners. d. economy is growing at a normal rate.
Answer the following questions true (T) or false (F)
1. Physical capital refers to stocks and bonds. 2. Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy. 3. In the United States, the typical person who has lost his or her job finds another one in a few months except during severe recessions.