Econ 3229 Study Guide
Exports more than it imports
Must have ample gold reserves
Cannot have a domestic monetary policy
Must be running large trade deficits
+0.5%
-0.5%
+ 16.7%
+6.5%
Country A's inflation rate will have to match country B's
Country A's monetary policy must be conducted so the inflation rate in country A matches the inflation rate in country B
Country A's monetary policy will not be able to be used to address domestic issues
All of the answers given are correct
Contributes to the rigidity of exchange rates
Contributes to the equalization of expected returns across countries
Eliminates arbitrage opportunities
Makes interest rates equal across countries
Be equal if capital flows freely internationally
Always be equal
Be equal only if the exchange rate between the two countries is fixed
Be equal only if the inflation rate is the same in each country
The interest rates on the bonds will be identical
The prices of the bonds will be identical
The inflation rates in each country will be identical
None of the answers provided is correct
A country cannot be open to international capital flows, control its domestic interest rate and fix its exchange rate
A country can be open to international capital flows and control its own domestic interest rate but it can't fix its exchange rate
A country can be open to international capital flows, control its domestic interest rate, and fix its exchange rate
A country cannot be open to international capital flows if it expects to control its own domestic interest rate and to fix its exchange rate
A controlled domestic interest rate, a closed capital market and a flexible exchange rate
A controlled domestic interest rate, an open capital market and a flexible exchange rate
No control over the domestic interest rate, an open capital market and a flexible exchange rate
A controlled domestic interest rate, an open capital market and a fixed exchange rate
Mexico limiting the number of U.S. dollars an American can bring into the country
Mexico limiting the number of U.S. dollars its citizens can purchase before leaving on their vacation to the U.S.
Mexico limiting the number of pesos its citizens can take out of the country
All of the answers given would be examples of capital outflow controls
Controls on capital inflows
Controls on capital outflows
Controls on both capital inflows and outflows
Fixed exchange rates
Get the European Central Bank to also agree to fixed exchange rates
Maintain ample reserves of dollars
Be willing to exchange dollars for euros whenever anyone asked
Impose capital controls
They increase the number of dollars
Downward pressure is put on domestic interest rates
The domestic money supply increases
All of the answers given are correct
The quantity of M1
Interest rates
The quantity of M2
Controlling the size of the money multiplier
Equal to the target interest rate
Below the target interest rate
Above the target interest rate
That is equal to the overnight interbank lending rate
An increase in the size of the Fed's balance sheet through purchasing securities
Increasing the discount rate
Making loans to non-bank corporations
An increase in the size of the Fed's balance sheet through selling securities
Currency-to-deposit ratio
Discount rate
Target federal funds rate
Reserve requirement
The FOMC sets the federal funds rate
The discount rate is the primary policy tool of the FOMC
The FOMC sets the target federal funds rate
The difference between the target and actual federal funds rate is the dealer's spread
Discount window lending
Lending to nonbanks
Federal funds rate target
Deposit rate
Raise the required reserve rate
Purchase U.S. Treasury securities
Sell U.S. Treasury securities
Raise the discount rate
The market federal funds rate will decrease
The market federal funds rate will equal the target rate
The market federal funds rate will increase
Nothing; the Fed would act immediately and the market would not be affected
There is no way that the Fed could keep the actual rate at the target rate
The target rate changes with the demand for reserves
Attaining the target rate involves forecasting reserve demand and forecasts are subject to error
None of the answers is correct; the target and the actual federal funds rates are always equal
Lender of last resort
Open market operations
The government's bank
Regulation of banking
No matter what condition the bank is in
Only if the bank is sound financially and can provide collateral for the loan
But if the bank doesn't have collateral the interest rate is higher
Only if the bank would fail without the loan
Primary credit
Conditional credit
Seasonal credit
Secondary credit
Banks who qualify for a lower interest than what is available under primary credit
Banks that are in trouble and cannot obtain a loan from anyone else
Banks that want to borrow without putting up collateral
Foreign banks
Wait!
Here's an interesting quiz for you.