To derive the external balance relationship under high capital mobility and floating exchange rates, an increase in government spending must be followed by
A) an increase in money stock to restore the balance of payments equilibrium.
B) a decrease in money stock to restore the balance of payments equilibrium.
C) a depreciation of the currency to restore the balance of payment equilibrium.
D) a decrease in investment spending to restore the balance of payments equilibrium.
A
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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 30 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. zero; zero b. $50,000; $50,000 c. $50,000; $500,000 d. The bank has insufficient reserves to meet its reserve requirements.
In a Bertrand model of oligopoly:
A. firms produce differentiated products and set their prices simultaneously. B. firms produce homogenous products and set their prices simultaneously. C. firms choose how much to produce simultaneously and the price clears the market given the total quantity produced. D. firms choose how much to produce and the price to charge simultaneously.