Assume the Central Bank buys $400K in US Treasury Bonds from corporations and the households. Also assume that the required ratio is .15 and the currency drain/currency ratio (how much people like to hold in cash rather than in their banks) is .12, then how much did the money supply increase or decrease? (hint - keep no more than 3 decimal places in your money multiplier and select the answer that comes closest) 1,303,600 B-1,303,600 1,659,200 -11,733,200 Question 11 4 Points The Eu has 19 countries inside of it and they all have a fixed exchange rate to the Euro (so to speak), and to do this, they must have the same interest rate (the EU has a Central Bank that sets the interest rate for all 19 countries). The author writes that this may not be much of a problem. Why does he say this? A the countries must be near in distance to one another B the countries must be able to keep their own currency as well the EU must keep their currency fixed against the American dollar the countries must have similar economies that face similar macroeconomic shocks and there is labor mobility Last How are the Chinese Households hurt by the fact that the Chinese government fixes its exchange rate? Their system does not have the advanced technology to manufacture products that are found on the world market The world trade organization prevents the Chinese government from copying other countries' patents The fixed exchange rate system makes products from other countries artificially low The prices of foreign goods are kept artificially high due to their exchange rate not being able to appreciate Question 15 4 Points Assume we have balanced trade and then our Government increases spending on infrastructure. What will happen to our trade deficit and why did this happen. our trade deficit will decrease because more Americans are working and they will import more goods our trade deficit will increase because more Americans are working and they will import more goods our trade deficit will decrease because more Americans are working and they will import more goods our capital account deficit will decrease because more Americans are working and they will export more goods