Author Question: Central banks buy and sell government securities instead of private company stocks and/or bonds, ... (Read 103 times)

mydiamond

  • Hero Member
  • *****
  • Posts: 804
Central banks buy and sell government securities instead of private company stocks and/or bonds, because:
 a. The purchase and sale of private company securities does not change a nation's monetary base. Only purchases or sales of government securities change the monetary base.
  b. Central banks have established communication systems only with the government.
  c. They might be accused of favoring one company over another.
  d. All the above.
  e. None of the above.

Question 2

Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
 a. Real GDP falls, and current international transactions become more negative (or less positive).
  b. Real GDP rises, and current international transactions become more negative (or less positive).
  c. Real GDP and current international transactions remain the same.
  d. Real GDP rises, and current international transactions remain the same.
  e. There is not enough information to determine what happens to these two macroeconomic variables.



kristenb95

  • Sr. Member
  • ****
  • Posts: 318
Answer to Question 1

.C

Answer to Question 2

.B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

Did you know?

The toxic levels for lithium carbonate are close to the therapeutic levels. Signs of toxicity include fine hand tremor, polyuria, mild thirst, nausea, general discomfort, diarrhea, vomiting, drowsiness, muscular weakness, lack of coordination, ataxia, giddiness, tinnitus, and blurred vision.

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Did you know?

It is widely believed that giving a daily oral dose of aspirin to heart attack patients improves their chances of survival because the aspirin blocks the formation of new blood clots.

For a complete list of videos, visit our video library