QUESTION 1

Which of the following statements is correct?

A loan by the central bank to a bank _________ the aggregate stock of reserves and ________ the central bank's assets.

	A.	keeps unchanged; decreases
	B.	increases; keeps unchanged
	C.	increases; decreases
	D.	keeps unchanged; increases
	E.	increases; increases

Which of the following statements is correct? If investors had reluctance towards locking their money for too long and if (1 +012) had a larger value than (1+0/1)(1+1/1) investors would therefore A. choose the two year investment if the difference in value [(1 + 012)2 minus (1 + 0/1)(1+12 1)] is smaller than the liquidity premium they require. + B. be indifferent between a two year investment and two successive one year investments. OC. be indecisive regarding the best option among a two year investment and two successive one year investments. D. choose a two year investment rather than two successive one year investments. E. choose the two year investment if the difference in value [(1 +012)2 minus (1 + 0/1)(1+11)] is larger than the liquidity premium they require. Which of the following statements is correct? If investors had reluctance towards locking their money for too long and if (1 +012) had a larger value than (1+0/1)(1+1/1) investors would therefore A. choose the two year investment if the difference in value [(1 + 012)2 minus (1 + 0/1)(1+12 1)] is smaller than the liquidity premium they require. + B. be indifferent between a two year investment and two successive one year investments. OC. be indecisive regarding the best option among a two year investment and two successive one year investments. D. choose a two year investment rather than two successive one year investments. E. choose the two year investment if the difference in value [(1 +012)2 minus (1 + 0/1)(1+11)] is larger than the liquidity premium they require