Suppose the currency price of the U.S. dollar in terms of the Japanese yen starts to fall. To prevent that from occurring, the U.S. central bank should
A) use U.S. dollars to buy Japanese goods.
B) use yen reserves to buy U.S. dollars in the foreign exchange market.
C) sell U.S. dollars in the foreign exchange market in exchange for yen.
D) buy both U.S. dollars and yen in the foreign exchange market.
B
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If the required reserve ratio was increased, then: a. the money supply would tend to decrease, but the outstanding loans of banks would tend to increase. b. both the money supply and the outstanding loans of banks would tend to decrease
c. the money supply would tend to increase, but the outstanding loans of banks would tend to decrease. d. both the money supply and the outstanding loans of banks would tend to increase.
The government would want the economy to contract when real GDP is
A. Above potential GDP and the price level is falling B. Below potential GDP in the price level is falling C. Above potential GDP and the price level is rising