Chapter 7: Review
Questions 7 and 8
Chapter 8: Review
Questions 7 and 10
7. What is the efficient markets hypothesis? What are the
most important characteristics of markets that are necessary for them to be
8. How do stock prices behave if stock markets are efficient
and if investors do not care about risk?
7. Explain the major options available to a bank that is
short of reserves. What determines which option a bank is likely to choose?
10. How can the Fed affect the amount of reserves that banks
hold? What interest rates can it change to manipulate the quantity of reserves?
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