CHAPTER 14

https://assets.openstax.org/oscms-prodcms/media/documents/Macroeconomics2e-OP_WRQqkIv.pdf

For a. and b., indicate whether each statement is true or false.

a.Money market fundsare included in the M1 money supply. True or false?

b. As of May 2020,savings(in other words, deposits in savings accounts at banks) are included in the M1 money supply. True or false?

2. (2 points) For a. and b., indicate whether each statement is true or false.

a. Acoin in circulation, for example a quarter trapped under a couch cushion, is included in the M2 money supply. True or false?

b. An increase in the number of physical credit cards and debit cards, ceteris paribus, represents an increase in the M2 money supply. True or false?

3. (2 points) Suppose you have a time deposit worth $1,200 that you withdraw from your bank, by redeeming the time deposit for cash. Use that information to answer parts a. and b. below.

a. As a result of your withdrawal, did M1 change? If so, by how much did M1 change?

b. As a result of your withdrawal, did M2 change? If so, by how much did M2 change?

CHAPTER 15

4. (1 point) Suppose the central bank suddenlyincreasesthe reserve requirement. What effect would that increase have on the money supply?

5. (1 point) What power does a central bank have that allows it to purchase government bonds from banks using open market operations?

6. (1 point) Supposenominal GDPincreases, and at the same time themoney supplyremains constant. What will happen to thevelocityof money as a result?

7. (1 point) Supposereal GDPandvelocityof money stay constant, but at the same time theprice levelincreases. What will be themoney supplychange in this scenario?

CHAPTER 16

8. (3 points) Suppose that economic recovery in Japan leads financial markets to anticipate anappreciationin the country's currency, the yen. What would be the likely impact on the following:

a. demand for yen?

b. supply of yen?

c. Exchange rate of yen compared to the U.S. dollar (ceteris paribus)?

9. (3 points) Briefly discuss whether astrengtheningU.S. dollar, relative to all other global currencies, is a "good" or "bad" thing for each of the following types of groups:

a. a foreign investor putting money into an investment in the United States

b. a U.S. financial investor with money already invested in another country

c. a U.S. based firm exporting products to other countries

10. (3 points) Suppose interest rates on the Canadian dollardecreasecompared to the rest of the world. What would be the likely impact on the following:

a. demand for Canadian dollars?

b. supply of Canadian dollars?

c. Exchange rate of Canadian dollars compared to the U.S. dollar (ceteris paribus)?

11. (0.5 points) Which type of exchange rate policy would be the best for avoiding large short-run fluctuations in exchange rates?

12. (0.5 points) Which type of exchange rate policy would be the best for empowering a central bank to conduct countercyclical monetary policy?