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Assume that banks become more conservative in their lending policies




11. Assume that banks become more conservative in their lending policies, and start holding some excess reserves. Compare this to a situation in which banks are not holding excess reserves. In the new situation, the size of the money multiplier will be;A. larger;B. the same;C. zero;D. smaller;=======================;12. So long as bank reserve holdings do not change too much, an open market sale of government bonds by the Central Bank should lead to _________ interest rates and _________ business investment.;A. lower, lower;B. higher, lower;C. lower, higher;D. higher, higher;==================================================;13. An emerging market economy faces a global crisis of confidence, which leads to an outflow of international reserves. If the Central Bank _______ the international reserves outflow, the money supply will ________.;A. devalues the exchange rate to match, stay the same;B. does nothing about, decrease;C. prints money to match, increase;D. sterilizes, stay the same


Paper#27899 | Written in 18-Jul-2015

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