1. An increase in the dollar price of the British pounds will:

A. Increase the pound price of dollars

B.Decrease the pound price of dollars

C. Leave the pound price of dollars unchanged Cause

D. Britain's terms of trade with the United States to deteriorate

2. If bond prices decrease, then the:

A. Interest rate decreases

B. Interest rate increases

C. Transactions demand for money will decrease

D. Transactions demand for money will increase

3. The limited liability rule means that if a corporation goes bankrupt:

A. Shareholders are responsible for all the debts of the firm

B. Bondholders are responsible for all the debts of the firm

C. Shareholders can only lose the amount they invested

D. Bondholders only lose the face value of the bond

4. The Fed can regularly influence and change the risk-free rate of financial investments through its:

A. Open market operations

B. Quantitative easing

C. Required reserve ratio

D. Bank supervision

5. When a bank accepts a checkable deposit from a customer, its deposits will increase and its excess reserves will:

A. Increase by the same amount as deposits

B. Increase by less than the deposits

C. Increase by more than the deposits

D. Decrease.