Question

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23. The bursar function of the U.S Treasury is similar to the :

a.bank- of issue function performed by the Federal Reserve Board.

b.medium of exchange function performed by money.

c. general medium of payment function performed by money.

d. controller function of a major business firm or institution.

25. With the U.S. Government running a significantly large deficit, and monetary pollicy serving as fiscal policy, the second of three steps undertaken through means of open market operations to increase the money supply is:

a.the Federal Reserve buys still maturing U.S. Treasury bills, bonds and notes in the government securities market.

b.the Federal Reserve acts as the bursar of the U.S. Government.

c.he U.S. Treasury acts as the bursar of the U.S. Government.

d.the U. S. Treasury sells Treasury bills, bonds and notes in the government securities market.

26. The Solow Residual:

a. Is the percentage change in output (GDP) minus the percentage change in Inputs( capital and labor), where the different inputs are weighted by their factor shares.

b. Measures the proportion of output growth that cannot be explained by growth in capital and labor

c. Is a measure of the rate of technological progress, according to economy… Edward Prescott.

d. Is (or does) all of the above.

27. Commodity arbitrage is the market process which aligns, or equates, the exchange ratio between two different kinds of money in the marketplace to the configuration, structure, of commodity prices. This corrective mechanism is described by the:

a,Rogoff-Davidson Theory of Foreign Exchange.

b. Balance-of-Payments (BOP) Theory of Foreign Exchange.

c. Purchasing Power Parity (PPP) Theory of Foreign Exchange.

d. International Economics and Finance Theory of Foreign Exchange

Answer 1

23. (D)

Reason it works as controllor of fiancial transaction, money rotation among different firms and institution similar to US treasury.

25 (A)

Reason in order to increase the market supply of money federal reserve buys the maturing U.S. Treasury bills, bonds and notes in the government securities market. it leads to increase in liquidty in the market and increase the money flow in the hands of household, investors and producers it leads to bring back the economy on its stable conditions.

26 (B)

reason solow residual is proportion of output growth that cannot be explained by growth in capital and labor, because it measures the productivity of factors of production combindly that we consider as total factor productivity it is also affected by economic, cultural factors, technological, investment in productive sectors.

27 (C)

Reason Purchasing Power Parity (PPP) Theory of Foreign Exchange describes that currency of two counties are equated and aligned in terms of their purchasing power. it means that  two countries should equal the ratio of the two countries' price in terms of basket of commodites availble in each country.