Author Question: If the Bank of America lends 100 million and the reserve requirement is 10, the monetary base: a. ... (Read 33 times)

mydiamond

  • Hero Member
  • *****
  • Posts: 804
If the Bank of America lends 100 million and the reserve requirement is 10, the monetary base:
 a. Falls by 100 million.
  b. Falls by 10 million.
  c. Does not change.
  d. Rises by 100 million.
  e. Rises by 10 million.

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 the nominal value of the domestic currency in the context of the Three-Sector-Model?
 a. The real risk-free interest rate rises, and nominal value of the domestic currency falls.
  b. The real risk-free interest rate rises, and nominal value of the domestic currency remains the same.
  c. There is not enough information to determine what happens to these two macroeconomic variables.
  d. The real risk-free interest rate rises, and nominal value of the domestic currency rises.
  e. The real risk-free interest rate falls, and nominal value of the domestic currency falls.



mariahkathleeen

  • Sr. Member
  • ****
  • Posts: 337
Answer to Question 1

.C

Answer to Question 2

.D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Earwax has antimicrobial properties that reduce the viability of bacteria and fungus in the human ear.

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

For a complete list of videos, visit our video library