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Unformatted text preview: ld no currency. Purdue Federal Credit Union Assets Liabilities Required Reserves $100,000 Deposits $5,000 Excess Reserves Loans 18. PFCU is holding _______ in required reserves and has _______ in loans. A. $10,000; $85,000 B. $20,000; $75,000 C. $25,000; $70,000 D. $15,000; $80,000 *** 19. Suppose all banks hold the same ratio of excess to required reserves as PFCU. If the Fed wants to increase the money supply by $1,000,000 they will A. buy $200,000 in bonds from the public. *** B. sell $200,000 of bonds to the public. C. buy $150,000 of bonds from the public. D. sell $150,000 of bonds to the public. 20. Dressmart is a US company. In 2012 it purchased apparel from China, and the company in China used the revenue from its sale to buy US Treasury bonds. Together, these transactions A. increased both NX and NCO in China. *** B. decreased both NX and NCO in China. C. increased NX but had no effect on NCO in China. D. had no effect on NX but decreased NCO in China. E. [None of the above] [Use the following information to answer questions 21–22.] Hugo is trying to decide how to allocate his portfolio between bonds and stocks. % Average Risk Stocks Return (Std Dev) 0% 2% 0% 25% 4% 2% 50% 6% 4% 75% 8% 6% 100% 10% 8% 21. If Hugo devotes 75% of his portfolio to stocks, his average return will vary between _______ and _______ (about 95% of the time). A. 2%; 14% B. ‐4%; 20% *** C. ‐10%; 22% D. ‐2%; 14% 22. The table demonstrates that bonds are _______ compared to stocks, and their return is _______ . A. less risky; higher B. more risky; lower C. more risky; higher D. less risky; lower *** E. [There is not enough information to tell] 23. In an open economy, if national savings is less than domestic investment then the country has A. a capital inflow. *** B. a trade surplus. C. a falling price level. D. [All of the above] E. [None of the above] 24. The CPI is 140 in the US and 14,700 in Japan. If the nominal exchange rate is 120 Yen/$, then what is the real exchange rate (from the perspective of the US)? A. 1.00 B. 1.14 *** C. 1.23 D. 0.88 E. 0.75 25. (Consider the open market macro model.) Which of the following would increase the United States’ trade deficit? A. Balancing the government budget. B. Increased private savings in the US. C. Smal...
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This test prep was uploaded on 02/19/2014 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue University-West Lafayette.

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