If the government requires banks to keep 100 percent of their deposits on reserve, a 1,000 deposit in a checking account would lead to a 100,000 increase in the money supply.
a. True
b. False
Indicate whether the statement is true or false
Question 2
Assume that the yen price of one U.S. dollar rises to 80 yen and that the Bank of Japan has a target exchange rate of 75 yen per dollar. As a result, the Bank of Japan will intervene in the foreign exchange market by:
a. selling U.S. dollars and buying yen.
b. selling both U.S. dollars and yen.
c. buying U.S. dollars and selling yen.
d. buying both U.S. dollars and yen.
e. buying U.S. Treasury securities.
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