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Suppose that the Mexican peso has depreciated dramatically relative to the dollar and the central bank in Mexico is concerned about possible inflation brought about by the surge in import prices. Question: How can the central bank in Mexico counter the depreciation of the Mexican peso?

Suppose the money multiplier is 5. If banks hold excess reserves, the required reserve ratio:

Suppose that the Federal Reserve wants to target a higher interest rate, the Federal Reserve would then:

Refer to the balance sheet above. Suppose that Bank of America flooded the market with its mortgage backed securities (MBS) to acquire central bank reserves. What issue can this pose for Bank of America?

The nominal deficit that is recorded in governmental accounting records, depends primarily on:

Refer to the balance sheet above. What is a viable way for Bank of America to solve its balance sheet problem?

Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price of house: $150,000 Equity: $120,000 Debt: $30,000 @10% interest Interest Payments: $3,000   Suppose after 1 year the real estate speculator is able to sell the house for $50,000  during a time of decreasing real estate asset prices. What is the rate of return?

Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price of house: $200,000 Equity: $190,000 Debt: $10,000 @10% interest Interest Payments: $1,000   What is the leverage ratio in this scenario?

Suppose we have the following information for 2010: Potential output: $20 trillion Actual output: $19 trillion Actual Deficit: $ 200 billion Tax Rate: 15%   What is the structural deficit in 2010? What could be causing the structural deficit?

Suppose we have the following information for 2008: Potential output: $8 trillion Actual output: $7 trillion Actual Deficit: $ 250 billion Tax Rate: 6%   What is the structural deficit in 2008?