Questions from Macroeconomics

Q: If the reserve ratio is ¼ and the central bank increases the

If the reserve ratio is ¼ and the central bank increases the quantity of reserves in the banking system by $120, the money supply increases by a. $90. b. $150. c. $160. d. $480.

Q: Your uncle repays a $100 loan from Tenth National Bank (

Your uncle repays a $100 loan from Tenth National Bank (TNB) by writing a $100 check from his TNB checking account. Use T accounts to show the effect of this transaction on your uncle and on TNB. Has...

Q: What are demand deposits and why should they be included in the

What are demand deposits and why should they be included in the stock of money?

Q: In what sense is inflation like a tax? How does thinking

In what sense is inflation like a tax? How does thinking about inflation as a tax help explain hyperinflation?

Q: Describe how banks create money.

Describe how banks create money.

Q: According to the quantity theory of money, which variable in the

According to the quantity theory of money, which variable in the quantity equation is most stable over long periods of time? a. money b. velocity c. price level d. output

Q: It is sometimes suggested that the Federal Reserve should try to achieve

It is sometimes suggested that the Federal Reserve should try to achieve zero inflation. If we assume that velocity is constant, does this zero-inflation goal require that the rate of money growth equ...

Q: Explain the difference between nominal and real variables and give two examples

Explain the difference between nominal and real variables and give two examples of each. According to the principle of monetary neutrality, which variables are affected by changes in the quantity of m...

Q: If the value of a nation’s imports exceeds the value of its

If the value of a nation’s imports exceeds the value of its exports, which of the following is NOT true? a. Net exports are negative. b. GDP is less than the sum of consumption, investment, and govern...

Q: Describe the difference between foreign direct investment and foreign portfolio investment.

Describe the difference between foreign direct investment and foreign portfolio investment. Who is more likely to engage in foreign direct investment—a corporation or an individual investor? Who is mo...