19. Inflation can redistribute wealth from those with Rising asset prices to tho

Question

19. Inflation can redistribute wealth from those with

Rising asset prices to those with falling asset prices.

Falling asset prices to those with declining asset prices.

Falling asset prices to those with rising asset prices.

Rising asset prices to those with decreasing asset prices.

41. If there is a trade deficit there will be a capital

Out and up flow.

Entry flow.

Inflow.

Outflow.

43. In the money market when the fed carries out an open market purchase the

Money supply curve shifts to the right and the interest rate rises.

Money supply curve shifts to the right and the interest rate falls.

Money supply curve shifts to the left and the interest rate falls.

Money supply curve shifts to the left and the interest rate rises.

44. If the Fed carries out an open market purchase of $2,000 with a 0.05 reserve required ratio and excess reserves of $1,900 then the money supply

Increases by $40,000.

Increases by $38,000.

Increases by $18,000.

Decreases by $28,000.

45. When there is comparative advantage the supply curve shifts to the right as

price falls and quantity increases.

True or False

47. When a bank’s excess reserves amount to zero

Deposits rise hence money creation is zero.

Deposits increase hence money creation is positive.

Deposits decrease hence money creation is negative.

Deposits are zero hence money creation is zero.

49. If there is a trade surplus there will be a capital

Inbound flow.

Outflow.

Inward flow.

Incoming flow.

50. Given that there is a decrease in transactions demand for money the

Money supply curve shifts to the right.

Money demand curve shifts to the right.

Money supply curve shifts to the left.

Money demand curve shifts to the left.

Explanation / Answer

(19) Option (3)

Inflation hurts people whose asset value is falling, and redistributes wealth from them to people whose asset value is rising.

(41) Option (3)

Trade Surplus = Net capital outflow and Trade deficit = Net capital inflow

(43) Option (2)

An open market purchase increases money supply, shifting money supply curve rightward and reducing interest rate.

(44) Option (1)

Increase in money supply = Amount of open market purchase / Reserve ratio = $2,000 / 0.05 = $40,000

NOTE: As per Chegg Answering Policy, first 4 questions are answered.

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