Question

15. Which of the following items is assets of a bank A. loans B. checking account deposits C, saving account deposits D. money borrowed from Federal Reserve 16. In an open economy, if a country has a trade surplus, which is NOT correct-? A. Exports > Imports. C. Saving > Investment D. Net capital outflow> 0 17. Inflation will be reflected as the directly proportional change of A. Total money supply increase B. Nominal wage growth, but not nominal interest rates C. Nominal wage growth and nominal interest rates D. Banks that have market power and refuse to lend money 18. For the classical dichotomy, which of the following is Not influenced by changes in the quantity of money_? A. Unemployment B. Nominal GDF C. Nominal interest rates D. Hourly wages 19. Which one is likely to cause a rise in net foreign investment (capital outflow ? A. High inflation in a major trading partner of the US B. A decrease in real interest rates among European nations C. An increase in the federal government deficit D. A reduction in the federal government deficit

Answer 1

15. A. loans (since banks give out loans and they expect repayment with interest )

16. B. Y< C+G+I (trade surplus means the country's net export is more the imports thus savings in more than investment it output  is more than what has been demanded hence Y> C+G+I )

17. A. a total money supply increase

18. A. Unemployment according to classical dichotomy and theory of money neutrality , quanity of money only affects nominal variables)

19. D. a reduction in government deficit (capital outflow is associated with the domestic economy doing considerably well and in has sufficient foreign reserves to invest abroad for capital gains)