Homework Answers
False.
The functions of the central bank includes, issuing currency, bankers to the other bank, advisor to the government, lender of last resort, printing new currency, controlling the money supply of the economy.
Central banks do not control the economy, they control the money supplied in an economy.
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Question 17 of 40 Among the functions of the central bank is controlling the economy. True...
Question 18 of 40 1.0 Points f the FED raises the discount rate, money and the...
Question 18 of 40 1.0 Points f the FED raises the discount rate, money and the economy will tend to grow faster. True False Reset Selection
"The money supply of an economy increases when the central bank simultaneously decreases the reserve requirement...
"The money supply of an economy increases when the central bank simultaneously decreases the reserve requirement and sells government bonds in open market." Explain whether this statement is true, false or uncertain. (6 marks) What should money growth rate be if real output grows 4% per year, velocity grows 2% per year, and the central bank targets inflation to be 2% per year? (4 marks) What is the inflation tax? Explain. (6 marks) Explain (with the aid of diagrams) whether...
Assume that the sacrifice ratio for an economy is 4. If the central bank wishes to...
Assume that the sacrifice ratio for an economy is 4. If the central bank wishes to reduce inflation from 10 percent to 5 percent, this will cost the economy ______ percent of one year's GDP. 4 5 20 40
How does the central bank influence the economy in detail? How does the commercial bank influence...
How does the central bank influence the economy in detail? How does the commercial bank influence the economy in detail?
Assume the economy was in equilibrium and then the central bank injects money into the economy...
Assume the economy was in equilibrium and then the central bank injects money into the economy (increases money supply). Draw a graph showing how the market for money changes due to the monetary injection. (6 points). (Explain the changes in words) b) Summarize how the value of money, price level, and quantity of money change. (4 points).
32. The credibility of the central bank: a. promotes long-run growth. b. is irrelevant for controlling inflation. c...
32. The credibility of the central bank: a. promotes long-run growth. b. is irrelevant for controlling inflation. c. is crucial for controlling inflation and stabilizing output d. promotes sensible fiscal policy. e. implies low interest rates. 33. You are the head of the central bank and you want to maintain 2 percent long-run inflation, using the quantity theory of money. If the real GDP growth is 4 percent and velocity is constant, you suggest a: a. 6 percent interest rate...
Buying and selling Foreign Currency by the central bank to alter exchange rate is called central...
Buying and selling Foreign Currency by the central bank to alter exchange rate is called central bank intervention. True or false
Question Completion Status: QUESTION 17 Which of the following is true of open-market operations? It involves...
Question Completion Status: QUESTION 17 Which of the following is true of open-market operations? It involves the purchase and sale of government securities by the central bank. It involves the purchase and sale of stocks and bonds by private banks. It involves measures taken by the government to ensure adequate circulation of coins and currency. It involves the central bank increasing spending. QUESTION 18 are the most liquid. Among the following assets O money market mutual funds O currency and...
Question 7 1 pts Suppose that the central bank of a small open economy reduces its...
Question 7 1 pts Suppose that the central bank of a small open economy reduces its nominal interest rate by 7 percentage points. If its overall price level rises by 15 percent, what is the change, in percentage points (whole number), in the real interest rate? Give your answer as a whole number.
The way a question is framed can change the results of a poll. A. True B....
The way a question is framed can change the results of a poll. A. True B. False Reset Selection
Question 18 of 40 1.0 Points f the FED raises the discount rate, money and the economy will tend to grow faster. True False Reset Selection
32. The credibility of the central bank: a. promotes long-run growth. b. is irrelevant for controlling inflation. c. is crucial for controlling inflation and stabilizing output d. promotes sensible fiscal policy. e. implies low interest rates. 33. You are the head of the central bank and you want to maintain 2 percent long-run inflation, using the quantity theory of money. If the real GDP growth is 4 percent and velocity is constant, you suggest a: a. 6 percent interest rate...
Question Completion Status: QUESTION 17 Which of the following is true of open-market operations? It involves the purchase and sale of government securities by the central bank. It involves the purchase and sale of stocks and bonds by private banks. It involves measures taken by the government to ensure adequate circulation of coins and currency. It involves the central bank increasing spending. QUESTION 18 are the most liquid. Among the following assets O money market mutual funds O currency and...
Question 7 1 pts Suppose that the central bank of a small open economy reduces its nominal interest rate by 7 percentage points. If its overall price level rises by 15 percent, what is the change, in percentage points (whole number), in the real interest rate? Give your answer as a whole number.
The way a question is framed can change the results of a poll. A. True B. False Reset Selection
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