The International Monetary Fund was created to achieve each of the following goals EXCEPT
A) lend funds to countries with international payment problems.
B) lend funds to large government infrastructure projects.
C) monitor and offer advice on the exchange rate policies of member nations.
D) encourage free convertibility of the currencies of member nations.
B
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How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and
firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.
If the relative price of one unit of good X is 5 units of good Y, then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________
A) $20,000; $10,000 B) $40,000; $8,000 C) $30,000; $5,0000 D) $5,000; $40,000 E) a and c
Economic analysis indicates that high tax rates will
A) promote wasteful use of resources. B) retard capital formation. C) all of the above. D) reduce productive activity.
Assume the government purposely incurs a budget deficit that is financed by borrowing. As a result, interest rates rise and the amount of private investment spending declines. This illustrates:
A. the equation-of-exchange effect. B. the crowding-out effect. C. the paradox of thrift. D. the wealth effect.