The main purpose of the Fed is to
a. serve as the bankers' bank for member banks.
b. regulate interest rates.
c. print Federal Reserve Notes.
d. regulate financial institutions.
e. maintain the proper functioning of our money system.
E
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All of the following are points of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 EXCEPT
A) creating a Consumer Financial Protection Bureau. B) requiring mortgage lenders to review income and credit histories of applicants to ensure they can afford payments. C) imposing tighter restrictions on banks to limit risky investments. D) requiring firms that create mortgage backed securities to keep at least 50 percent of their value as reserves.
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and current international transactions become more negative (or less positive). b. There is not enough information to determine what happens to these two macroeconomic variables. c. The real risk-free interest rate rises, and current international transactions become more positive (or less negative). d. The real risk-free interest rate and current international transactions remain the same. e. The real risk-free interest rate falls, and current international transactions become more negative (or less positive).