If 1,000 is deposited in a bank with 100 reserve requirements, ...

[casperchen82]

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.

[macagnavarro]

Answer to Question 1

.A

Answer to Question 2

.A

[casperchen82]

YES! Correct, THANKS for helping me on my review

[parker125]

Thanks for the timely response, appreciate it