This topic contains a solution. Click here to go to the answer

Author Question: Rising inflationary pressure caused the U.S. to tighten its monetary policy at the end of the 1960s. ... (Read 77 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
Rising inflationary pressure caused the U.S. to tighten its monetary policy at the end of the 1960s.
 
  As a result, market interest rates rose above the Regulation Q ceiling and American banks found it impossible to attract time deposits for re-lending. How did the banks get around this problem? A) by setting their own interest rates and then using better business as compensation for government regulations
  B) by borrowing funds from European branches, which faced no restriction on the interest they could pay on Eurodollar deposits
  C) by pushing through new legislation that nullified Regulation Q
  D) by creating subsidiary branches in foreign countries
  E) by waiting to trade time deposits until Regulation Q no longer applied

Question 2

What is the AA-curve? Why does it have a negative slope? What factors cause it to shift?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

strudel15

  • Sr. Member
  • ****
  • Posts: 324
Answer to Question 1

B

Answer to Question 2

The AA-curve is the specific levels of E and Y under which the money and foreign exchange markets are in equilibrium.
The AA-curve has a negative slope because an increase in Y will cause E to fall (a domestic currency appreciation).
The factors that affect it are: the money supply, price level, expected exchange rate, foreign interest rates, and the level of real money demand.




arivle123

  • Member
  • Posts: 569
Reply 2 on: Jun 30, 2018
Excellent


recede

  • Member
  • Posts: 315
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

The Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

Did you know?

GI conditions that will keep you out of the U.S. armed services include ulcers, varices, fistulas, esophagitis, gastritis, congenital abnormalities, inflammatory bowel disease, enteritis, colitis, proctitis, duodenal diverticula, malabsorption syndromes, hepatitis, cirrhosis, cysts, abscesses, pancreatitis, polyps, certain hemorrhoids, splenomegaly, hernias, recent abdominal surgery, GI bypass or stomach stapling, and artificial GI openings.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

For a complete list of videos, visit our video library