This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Rising inflationary pressure caused the U.S. to tighten its monetary policy at the end of the 1960s. ... (Read 39 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
on: Jun 30, 2018
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
Reply #1 on: Jun 30, 2018
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
Great answer, keep it coming :)

vickyvicksss

  • Member
  • Posts: 351
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

According to research, pregnant women tend to eat more if carrying a baby boy. Male fetuses may secrete a chemical that stimulates their mothers to step up her energy intake.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Pneumonia. This common lung inflammation may be caused by bacteria, viruses, or fungi and is often d Pneumonia. This common lung inflammation may be caused by bacteria, viruses, or fungi and is often d
A technician-made adapter used to test exhaust system back pressure. A technician-made adapter used to test exhaust system back pressure.
A gasoline direct-injection system injects fuel under high pressure directly into the combustion ... A gasoline direct-injection system injects fuel under high pressure directly into the combustion ...
Pressure Ulcer Stages Pressure Ulcer Stages
Vertical and Horizontal Changes in Pressure Vertical and Horizontal Changes in Pressure
Afterload is the pressure that the ventricles must overcome in order to open the aortic and pulmonic Afterload is the pressure that the ventricles must overcome in order to open the aortic and pulmonic
Video: Physiology of Asthma

For a complete list of videos, visit our video library