The federal funds rate is the interest rate:
a. The Federal Reserve changes banks that borrow from it.
b. U.S. financial institutions charge their best customers.
c. On U.S. interbank loans.
d. Central banks charge individuals.
e. U.S. financial institutions pay to their best (i.e., largest) depositors.
Question 2 - Assume that the central bank increases the reserve requirement. 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 GDP Price Index falls, and nominal value of the domestic currency falls.
b. The GDP Price Index falls, and nominal value of the domestic currency rises.
c. The GDP Price Index falls, and nominal value of the domestic currency remains the same.
d. The GDP Price Index 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 - The federal funds rate is the interest rate:
a. On U.S. interbank loans.
b. The Federal Reserve changes banks that borrow from it.
c. The World Bank charges to central banks.
d. Central banks charge individuals.
e. U.S. financial institutions pay to their best (i.e., largest) depositors.
Question 4 - Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and current international transactions become more negative (or less positive).
b. The GDP Price Index rises, and current international transactions becomes more negative (or less positive).
c. The GDP Price Index and current international transactions remain the same.
d. The GDP Price Index rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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