1.Open market purchases by the central bank will ______________

	A. increase the currency deposit ratio.
	B. increase the monetary base.
	C. decrease the monetary base.
	D. decrease the money supply.

2.Net capital outflow in a large open economy __________

	A. rises as the domestic real interest rate rises.
	B. does not depend on the domestic real interest rate.
	C. either increase or decrease as the domestic real interest rate rises.
	D. falls as the domestic real interest rate rises.

3.The monetary base of Ozlandia is $60. The currency-deposit ratio is 0.2 and reserve-deposit ratio is 0.1. Calculate the money supply.

4.

In a small open economy with a floating exchange rate, if the government imposes a tariff on foreign goods, then in the new short-run equilibrium _____________

	A. imports will decrease while exports remain constant, leading to a rise in net exports.
	B. imports will decrease and exports will decrease by an equal amount.
	C. both imports and exports will remain unchanged.
	D. imports will decrease while exports will increase, leading to a rise in net exports.