Which one of the following statements is most true?
A.If central banks are not sterilizing and the home country has a balance of payments surplus, any associated increase in a foreign central bank’s claims on the home country impli...
The liabilities side of a central bank include
A.deposits held by the privateB.currency inC.deposits held by the private banks and currency inD.deposits held by the private banks and currency inE.deposits held by the private ba...
Which one of the following statements is most true?
A.Any central bank purchase of assets automatically results in an increase in the domestic money supply, while any central bank sale of assets automatically causes the money supply...
A central bank’s international reserves include
A.any gold that itB.any silver that itC.any gold that it owns and foreign and domesticD.any silver that it owns and foreign and domesticE.only foreign and domestic assets.Answer: C
Fiscal Expansion under a fixed exchange
Fiscal Expansion under a fixed exchange rate has what effect(s) on the economy?A.The money supplyB.OutputC.The exchange rateD.The exchange rate decreases initially but then returns...
When a country’s currency is devalued,
A.outputB.outputC.the money supplyD.the money supplyE.Both B andAnswer: E. When a currency is devalued, output and the money supply expand as the economy’s equilibrium shifts outw...
the central bank gives up its ability to
By fixing the exchange rate, the central bank gives up its ability toA.adjustB.increase governmentC.influence the economy through fiscalD.depreciate the domesticE.influence the eco...
a temporary fiscal expansion would increase output
Using a figure, show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the longAnswer: A temporarily fi...
Benefit(s) of the gold standard include
A.asymmetryB.making real values of national monies more stable andC.limiting moneyD.Both A andE.Both B andAnswer: E
Explain the following figure:
Answer: The figure depicts the effect of a permanent increase in the money supply starting from full employment equilibrium. After the initial increase in the money supply and the ...
show the phenomenon of overshooting.
Using the DD – AA framework, show the phenomenon of overshooting. Use a figure to explain when it is taking place.Answer: The figure below shows the phenomenon of overshooting. ...
Imagine that the economy is at a point on the DD-AA schedule
Use a figure to study the following question: Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the output and asset markets are...
