Which of the following does purchasing-power parity imply?
a. the foreign price level times the nominal exchange rate (given as amount of foreign currency per dollar) equals the U.S. price level.
b. The price of domestic goods relative to foreign goods cannot change.
c. The nominal exchange rate is the ratio of foreign prices to U.S. prices.
d. All of the above are correct.
c
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A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 10 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?
a. $200,000; $200,000 b. $200,000; $2,000,000 c. $300,000; $300,000 d. $300,000; $3,000,000
Spending VCU4 on real-world goods and services causes the nation's:
a. Monetary base to rise. b. M2 money supply to rise. c. M2 money multiplier to rise. d. Monetary base to remain the same.