Assume that the central bank increases the reserve requirement. If the nation has highly mobile 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 and real GDP remain the same.
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The quantity of real loanable funds per time period falls, and real GDP falls.
d. The quantity of real loanable funds per time period rises, and real GDP falls.
e. The quantity of real loanable funds per time period falls, and real GDP rises.
Question 2 - Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions becomes more negative (or less positive).
b. The quantity of real loanable funds per time period rises, and current international transactions becomes more positive (or less negative).
c. The quantity of real loanable funds per time period rises, and current international transactions remain the same.
d. There is not enough information to determine what happens to these two macroeconomic variables.
e. The quantity of real loanable funds per time period and current international transactions remain the same.
Question 3 - Excess reserves are important to bankers because:
a. They are typically deposited in special high-yielding investment accounts.
b. They represent the funds that can be used to acquire income-producing assets, such as loans and securities.
c. They indicate the profits that are divided among the financial institution's owners.
d. They indicate profitable banking practices.
e. If they are not maintained, banking regulators may shut down the bank.
Question 4 - Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions becomes more positive (or less negative).
b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same.
e. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same.
Question 5 - Excess reserves that are voluntarily held by institutions are called:
a. Customary reserves.
b. Bank equity.
c. Normal reserves.
d. Funny money.
e. Federal funds.
Question 6 - Assume that the central bank increases the reserve requirement. If the nation has highly mobile 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 and net nonreserve-related international borrowing/lending remain the same.
b. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
c. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
e. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
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