Macroeconomics 5th Edition by Olivier Blanchard

Exercise 1

Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
a. Income and financial wealth are both examples of stock variables.
b. The term investment, as used by economists, refers to the purchase of bonds and shares of stock.
c. The demand for money does not depend on the interest rate because only bonds earn interest.
d. About two-thirds of U.S. currency is held outside the United States.
e. The central bank can increase the supply of money by selling bonds in the market for bonds.
f. The Federal Reserve can determine the money supply, but it cannot determine interest rates-not even the federal funds rate-because interest rates are determined in the private sector.
g. Bond prices and interest rates always move in opposite directions.
h. Since the Great Depression, the United States has relied on federal deposit insurance to help solve the problem of bank runs.