Print Page - Central banks get the purchasing power to buy government securities by:

Central banks get the purchasing power to buy government securities by:
a. Reducing currency in circulation.
b. Making discount loans to banks.
c. Taking loans from the government.
d. Increasing their liabilities in the form of deposits from banks.
e. None of the above.

Question 2 - Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.

Question 3 - Central banks get the purchasing power to buy government securities by:
a. Increasing their liabilities in the form of deposits from banks.
b. Reducing currency in circulation.
c. Making discount loans to banks.
d. Taking loans from the government.
e. All of the above.

Question 4 - Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and real GDP falls.
b. The quantity of real loanable funds per time period rises, and real GDP rises.
c. The quantity of real loanable funds per time period rises, and real GDP remains the same.
d. The quantity of real loanable funds per time period and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.

Question 5 - Regarding our rule-of-thumb for determining what causes changes in a nation's monetary base, which of the following is not true:
a. Only central banks are above the line.
b. To increase the monetary base, funds have to be moved from above the line to below the line.
c. Any time a central bank changes one of its major monetary tools, the monetary base changes.
d. For the monetary base to change, the central bank must, in some way, be involved.
e. All the above are true.

Question 6 - Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and GDP Price Index rises.
b. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
c. The quantity of real loanable funds per time period rises, and GDP Price Index falls.
d. The quantity of real loanable funds per time period and GDP Price Index remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.

Question 7 - A central bank has the most control over:
a. A nation's preferred asset ratios.
b. The monetary base.
c. The real exchange rate.
d. The velocity of money.
e. The M2 money supply.

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Other Fields Homework Help Economics Topic started by: jnote01 on Feb 24, 2018