Author Question: A balance sheet for the central bank of Pecunia is shown below: Central Bank Balance Sheet Assets ... (Read 190 times)

yoooooman · **on:** Jun 30, 2018

A balance sheet for the central bank of Pecunia is shown below: Central Bank Balance Sheet Assets Liabilities Foreign assets 1,000 Deposits held by private banks 500 Domestic assets 1,500 Currency in circulation 2,000 Please write the

new balance sheet if the bank sells 100 worth of foreign bonds for domestic currency.

Question 2

Which of the following statements is the MOST accurate? In general, under the monetary approach to the exchange rate

A) the interest rate is not independent of the money supply growth rate in the short run.
B) the interest rate is independent of the money supply growth rate in the long run.
C) the interest rate is not independent of the money supply growth rate in the long run, but independent in the short run.
D) the interest rate is not independent of the money supply growth rate in the long run.
E) the interest rate is a factor of the money supply growth rate only in the short term.

elizabethrperez · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Central Bank Balance Sheet
Assets Liabilities
Foreign assets 900 Deposits held by private banks 500
Domestic assets 1,500 Currency in circulation 1,900

Answer to Question 2

D