Q1 Why would eliminating the central bank's independence lead to a more pronounced political business cycle?
Q2 "The federal funds rate can never be above the discount rate."Is this statement true, false, or certain? Explain your answer.
Q3 "The federal funds rate can never be below the interest rate paid on reserves." Is this statement true, false, or certain? Explain your answer.
Q4 You often read in the newspaper that the Fed has just lowered the discount rate. Dose this signal that the Fed is moving to a more expansionary monetary policy? Why or Why not?
Q5 In the mid- to late 1970s, the yen appreciated relative to the dollar, even though Japan's inflation rate was higher than America's. How can this be explained by an improvement in the productivity of Japanese industry relative to American industry?
Q6 If the British central bank lowers interest rates to reduce unemployment, what will happen to the value of the pound in the short run and the long run?
Q7 If a country's par exchange rate was undervalued during the Bretton Woods fixed exchange rate regime, what kind of intervention would that country's central bank be forced to undertake, and what effect would it have on its international reserves and the money supply?
Q8 "If a country wants to keep its exchange rate from changing, it must give up some control over its money supply." Is this statement true, false, or uncertain? Explain yours answer.