Many years ago, the traditional mortgage loan structure specified
A. a down payment of 20%.
B. a variable interest rate.
C. an initial loan-to-value ratio of 100%.
D. all of the options are correct.
Answer: A
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If Veronica withdraws $1,500 from her savings account and deposits it in her checking account, then M1 will ________ and M2 will ________
A) increase; decrease B) increase; not change C) not change; decrease D) not change; not change
The nominal interest rate will be less than the real interest rate when
A) the rate of inflation is negative. B) the real interest rate is negative. C) the rate of inflation is positive and increasing. D) the rate of inflation is positive but decreasing.
If an economy has a fixed exchange rate and it chooses to issue $10 million in bonds, what will happen according to the Monetary approach?
A) It will have to increase its foreign exchange reserves. B) It will have to decrease its foreign exchange reserves. C) It will have to allow its currency to appreciate. D) It will have to allow its currency to depreciate.
Suppose that a drought significantly reduces agricultural production one year. In addition, suppose the Fed accommodates this supply shock by implementing an expansionary monetary policy. Which of the following would you expect to occur as a result of these changes?
a. The short-run aggregate supply curve will shift to the right, the short-run Phillips Curve will shift to the left, and the accommodating monetary policy will raise inflation while lowering unemployment. b. The short-run aggregate supply curve will shift to the right, the short-run Phillips Curve will shift to the left, and the accommodating monetary policy will increase unemployment while lowering inflation. c. The short-run aggregate supply curve will shift to the left, the short-run Phillips Curve will shift to the right, and the accommodating monetary policy will raise inflation while lowering unemployment. d. The short-run aggregate supply curve will shift to the left, the short-run Phillips Curve will shift to the right, and the accommodating monetary policy will increase unemployment while lowering inflation.