Question 1 3 pts New M1 money will be created as soon as: The Reserve Bank buys $10m worth of Government bonds from the NZ Superfund depositing the money into the Fund's bank, the Reserve Bank's assets increase by $10m (securities) and its liabilities also increase by $10m (bank reserves). You deposit $100 cash into your transactions deposits account, your bank's assets will increase by $100 (cash) and its on demand deposits liabilities will also increase by $100. None of the answers. You pre given $1m loan to buy a house and your bank places the money into your transactions deposits account, the bank's assets increase by $1m (loans) and its accounts payable liabilities (on demand deposits) also increase by $1m. The Reserve Bank buys NZ $10m worth of foreign currencies from an export company depositing the money into the exporter's bank, the Reserve Bank's assets increase by $10m (foreign currency reserves) and its liabilities also increase by $10m (bank reserves). Question 2 3 pts The monetary base will increase as soon as: The Reserve Bank drops newly minted 100 dollar bills from a helicopter. The Reserve Bank engages in a forex market intervention buying foreign currencies in the foreign exchange market. The Reserve Bank engages in an open market operation selling government securities to pension funds. The Reserve Bank engages in an open market operation selling government securities to banks. hoone of the answers. Question 3 3 pts A multinational bank is more likely to expand in a foreign country by opening: A subsidiary because it will be less vulnerable to the adverse effects of a host country currency devaluation. A branch because it will be less vulnerable to the adverse effects of a host country currency devaluation. None of the answers. O A subsidiary if its main business in the host country is going to be wholesale banking. Abranch if its main business in the host country is going to be retail banking. 3 pts Question 4 atunon Sontember 2011 and January 2015, the Swiss National Bank (SNB) set a minimum exchange Question 4 3 pts Between September 2011 and January 2015, the Swiss National Bank (SNB) set a minimum exchange rate of Swiss francs 1.20 for 1 Euro, adding it will enforce this minimum rate with the utmost determination. This means: The SNB could issue Swiss Government bonds to soak up extra cash in the economy resulting from the currency intervention concerned the additional liquidity could fuel inflation. SNB was prepared to buy Swiss francs in very large quantities in the forex market. The SNB could buy Swiss Government bonds through open market operation to soak up extra cash in the economy resulting from the currency intervention if concerned the additional liquidity could fuel inflation. SNB was prepared to sell Swiss francs in exchange for foreign assets (e.g. Euros, German Government bonds) in the foreign exchange market. None of the answers. vection 5 3 nts