The reserves of financial institutions:
a. Are assets that financial institution's try to keep at the legal limit.
b. Are made up mainly of government securities and high quality corporate bonds.
c. Include the liability called "Borrowing from the central bank."
d. None of the above is correct.
e. Are the largest liability in a financial institution's balance sheet.
.A
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Other things the same, an increase in the U.S. interest rate
a. raises net capital outflow which decreases the quantity of loanable funds demanded. b. raises net capital outflow which increases the quantity of loanable funds demanded. c. lowers net capital outflow which decreases the quantity of loanable funds demanded. d. lowers net capital outflow which increases the quantity of loanable funds demanded.
The rational expectations perspective suggests that:
A. fiscal policy is more powerful than monetary policy. B. monetary policy is more powerful than fiscal policy. C. fiscal and monetary policy are not likely to achieve their stated aims. D. fiscal policy works only to the extent that it is accompanied by fully anticipated changes in the money supply.