A reduction in the required reserve ratio has the instant effect of:
a. Increasing excess reserves.
b. Increasing bank shareholders' equity.
c. Decreasing bank shareholders' equity.
d. None of the above is correct.
e. Increasing the monetary base.
Question 2 - Assume that the central bank purchases government securities in the open market. 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 the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. The GDP Price Index rises, and nominal value of the domestic currency rises.
c. The GDP Price Index falls, and nominal value of the domestic currency rises.
d. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
e. The GDP Price Index rises, and nominal value of the domestic currency falls.
Question 3 - A reduction in the required reserve ratio has the instant effect of:
a. Increasing the monetary base.
b. Increasing excess reserves.
c. Increasing bank shareholders' equity.
d. Increasing bank reserves.
e. All of the above are correct.
Question 4 - Assume that the central bank purchases government securities in the open market. 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 falls, and reserve-related (central bank) transactions remains the same.
b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
c. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remains 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 reserve-related (central bank) transactions remain the same.
Question 5 - A reduction in the required reserve ratio has the instant effect of:
a. Increasing bank reserves.
b. Increasing excess reserves.
c. Increasing bank shareholders' equity.
d. None of the above is correct.
e. Increasing the monetary base.
Question 6 - Assume that the central bank purchases government securities in the open market. 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 falls, and reserve-related (central bank) transactions remains the same.
b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
c. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remains 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 reserve-related (central bank) transactions remain the same.
Question 7 - A reduction in the required reserve ratio has the instant effect of:
a. Increasing excess reserves.
b. Increasing bank shareholders' equity.
c. Increasing bank reserves.
d. All of the above are correct.
e. None of the above is correct.
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