If you deposit 500 into a savings deposit, the immediate effect (do not consider the money multiplier which we will study in the next chapter) is:
a. M1 rises, M2 rises, and the monetary base remains the same.
b. M1, M2, and the monetary base rise.
c. M1, M2, and the monetary base fall.
d. M1, M2, and the monetary base remain the same.
e. M1 falls, M2 remains the same, and the monetary base remains the same.
Question 2 - Assume that the central bank tries to reduce unemployment by reducing the discount rate for banks. Which of the following unwelcome effects is not a side effect of this measure?
a. Higher inflation rates.
b. Declining nominal exchange rate
c. Crowding out.
d. All of the above are side effects of a reduced discount rate.
Question 3 - If you deposit 500 into a savings deposit, the immediate effect (do not consider the money multiplier which we will study in the next chapter) is:
a. M1 rises, M2 falls, and the monetary base remains the same.
b. M1 falls, M2 remains the same, and the monetary base remains the same.
c. M1 rises, M2 rises, and the monetary base remains the same.
d. M1, M2, and the monetary base rise.
e. M1, M2, and the monetary base fall.
Question 4 - In an economy with flexible exchange rates, which measure(s) are successful at reducing unemployment in the context of the Three-Sector-Model?
a. Decrease government spending.
b. Lower the discount rate for banks.
c. Raise tax rates.
d. Increase reserve requirements.
e. All of the above
Question 5 - If you deposit 500 into a savings deposit, the immediate effect (do not consider the money multiplier which we will study in the next chapter) is:
a. M1, M2, and the monetary base rise.
b. M1 falls, M2 remains the same, and the monetary base remains the same.
c. M1 rises, M2 rises, and the monetary base remains the same.
d. M1, M2, and the monetary base remain the same.
e. M1 rises, M2 falls, and the monetary base remains the same.
Question 6 - Assume the government decides to reduce spending in order to reduce the budget deficit, which it financed by borrowing in the real credit market. What is the first round effect on the value of the domestic currency, if there is low mobility in the international capital markets?
a. The value of the currency rises.
b. The value of the currency falls.
c. The value of the currency is unaffected.
d. The change in the value of the currency is ambiguous.
Quick Reply
