ECN 204 Final Exam F2011 - Professor Paul Missios Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following would tend to shift the supply of dollars in the foreign-currency exchange market model to the left? a. The expected rate of return on Canadian assets falls. b. The exchange rate rises. c. The expected rate of return on Canadian assets rises. d. The exchange rate falls. Table 29-5 The following information pertains to the Bank of Kingston. Assets: Liabilities: Reserves $12 000 Deposits $240 000 Loans $228 000 2. If a bank uses $80 of excess reserves to make a new loan when the reserve ratio is 25 percent, what happens to the money supply? a. The money supply will eventually increase by $320. b. The money supply initially increases by $20. c. The money supply will eventually increase by more than $20 but less than $80. d. The money supply initially decreases by $80. 3. Refer to Table 29-5. If all banks hold only the required 4 percent of deposits as reserves, then what is the money multiplier? a. 5 b. 10 c. 15 d. 25 4. At one time, the country of Aquilonia had no banks, but had currency of $10 million. Then a banking system was established with a reserve requirement of 20 percent. The people of Aquilonia deposited half of their currency into the banking system. If banks do not hold excess reserves, what is Aquilonia's money supply now? a. $10 million b. $12 million c. $25 million d. $30 million 5. During what period can the Bank of Canada influence unemployment? a. in the short run, but not the long run b. in neither the short nor long run c. in the long run, but not the short run d. in the short and long run 6. If the nominal exchange rate e is f