The sharp increase in the excess reserves held by the commercial banking system since the second half of 2008 increases the potential for
a. a sharp contraction in the money supply, which is likely to increase the length and severity of the recession.
b. a rapid increase in the money supply, potentially leading to inflation.
c. a gradual increase in the money supply, following the trend of the previous decade.
d. a reduction in the ability of banks to extend additional loans.
B
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Foreign exchange swaps involve:
A) selling one currency on the spot market and at the same time purchasing a forward B) trading goods rather than money to improve efficiency C) delaying payment of a spot contract until the currency is actually delivered D) none of the above
Refer to Table 2-6. What is James's opportunity cost of making a tricycle?
A) 2 tricycles B) 3/4 of a wagon C) 1/2 of a wagon D) 1/2 of a tricycle