Author Question: If 1,000 is deposited in a bank with 100 reserve requirements, that bank can lend out: a. 0 b. ... (Read 49 times)

casperchen82 · **on:** Jun 30, 2018

If 1,000 is deposited in a bank with 100 reserve requirements, that bank can lend out:
a. 0
b. 1,000
c. A multiple of 1,000
d. Less than 1,000, but more than 0.
e. 900.

Question 2

Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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 GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and GDP Price Index rises.
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The real risk-free interest rate and GDP Price Index remain the same.
d. The real risk-free interest rate falls, and GDP Price Index falls.
e. The real risk-free interest rate rises, and GDP Price Index falls.