Bank holding companies developed:
A. so foreign banks could open branches in the U.S.
B. so that unit banks could combine into larger banks.
C. to circumvent the regulation by the Office of the Comptroller of the Currency.
D. to get around the limitations on bank branching.
Answer: D
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According to the Taylor rule, if inflation equals 4 percent and there is a recessionary gap equal to 4 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 4 B. 2; 4 C. 1; 5 D. 4; 4
Under pressure from Japan, the United States, and Europe, China announced it switched from pegging the yuan against the dollar to linking the value of the yuan to a 'basket' of currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar. B) the value of the yuan has increased dramatically and is beginning to remove the trade imbalance between the United States and China. C) the value of the yuan has become very responsive to changes in demand and supply in the foreign currency market. D) the value of the yuan has decreased dramatically and has further spurred Chinese exports.
If the Fed increases the discount rate, what happens to the money supply?
A. Increases B. Decreases C. Stays the same D. None of these
Tariffs or quotas on an imported product:
A. Hurt domestic producers of the product B. Hurt domestic consumers of the product C. Hurt foreign consumers of the product D. Benefit foreign producers of the product