{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

310_PracticeExam2_Winter 2008

310_PracticeExam2_Winter 2008 - 1 of 10 Economics 310 Money...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 of 10 Economics 310 Money and Banking Practice Exam 2 Winter 2008
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 of 10 1. Financial commentators often interpret an inverted yield curve as a sign of impending recession because: (a) it implies that short term interest rates are likely to rise, and this will reduce investment; (b) it implies that short term interest rates are likely to fall, and this will reduce investment; (c) it implies that the central bank is liable to raise interest rates, and slow down the economy; (d) it implies that the central bank will be forced to reduce interest rates significantly in order to stimulate economic activity; (e) it implies that the liquidity or interest risk premium is falling, which only happens in periods of increased economic instability. 2. In the Federal funds market, 3. The central banks of many countries have abolished reserve requirements for their domestic banks. This has necessitated
Image of page 2
3 of 10 4. If the Fed raises the discount rate, then we expect to see
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}