Chapter 12

which country is the U.S.'s most important trading partner?

Canada

Suppose the economy is at full employment with a high inflation rate. Which combination of government policies is least likely to reduce the inflation rate?

buy government securities in the open market and decrease taxes

To reduce the Federal funds rate, the Fed can:

buy government bonds from the public

which one of the following is a tool of monetary policy for altering the reserves of commercial banks?

open market operations

If the exchange rate between the US dollar and the Japanese yen is $1=200 yen, then the dollar price of the yen is:

$.005

If an American can purchase 40,000 British pounds for $90,000, the dollar rate of exchange for the pound is:

$2.25

which of the following will likely accompany an expansionary money policy

a lower Federal funds rate

When the Federal Reserve acts to ease money and credit in the economy, then the aggregate:

demand curve will shift to the left

a market in which the money of one nation is exchanged for the money of another nation is a:

foreign exchange market

appreciation of the Canadian dollar will:

make Canada's exports more expensive and its imports less expensive

the economy is experiencing inflation and the Federal Reserve decides to pursue a restrictive money policy. Which actions by the Fed would be most consistent with this policy?

selling government securities

If the US dollar appreciates relative to the British pound, then:

the pound will depreciate relative to the US dollar