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Author Question: Central banks can increase the money supply by: a. Buying government securities. b. Selling ... (Read 85 times)

mspears3

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  • Posts: 586
on: Jun 30, 2018
Central banks can increase the money supply by:
 a. Buying government securities.
  b. Selling foreign exchange.
  c. Raising margin requirements.
  d. All of the above.
  e. None of the above.

Question 2

Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
 a. There is not enough information to determine what happens to these two macroeconomic variables.
  b. The real risk-free interest rate falls, and current international transactions become more positive (or less positive).
  c. The real risk-free interest rate rises, and current international transactions remain the same.
  d. The real risk-free interest rate rises, and current international transactions become more positive (or less negative).
  e. The real risk-free interest rate and current international transactions remain the same.


fromAlphatoOmega22

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  • Posts: 345
Reply #1 on: Jun 30, 2018
Answer to Question 1

.A

Answer to Question 2

.B


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