What Are the Results of a Contractionary Monetary Policy in an Open

question 26

Multiple Choice

What are the results of a contractionary monetary policy in an open economy with floating exchange rates and internationally mobile capital?

• A)The dollar appreciates, which leads to an increase in exports and a decrease in imports.The country therefore winds up with a deficit in capital and a surplus in its balance of trade.
• B)The dollar appreciates, which attracts foreign capital.Also, imports rise and exports decline.The country therefore winds up with a surplus in capital and an increase in its trade deficit.
• C)The dollar depreciates, which attracts foreign capital.Also, exports rise and imports decline.The country therefore winds up with a deficit in capital and a surplus in its balance of trade.
• D)The dollar depreciates, which leads to a larger real GDP and a larger trade surplus.

Recognize transactions exempt from imputed interest rules.

Define Original Issue Discount (OID) and explain its creation.

Describe the methodology for computing the initial amount of an Original Issue Discount (OID).

Explain the process of reporting interest income from an OID instrument.

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Definitions:

Memory Cells

B or T cells (lymphocytes) that permit rapid mobilization of the immune response on second or subsequent exposure to a particular antigen. See memory B cells and memory T cells.

Dendritic Cells

Immune cells that process antigen material and present it on their surface to other cells of the immune system, playing a critical role in triggering adaptive immunity.

Natural Killer Cells

A type of lymphocyte (white blood cell) that plays a major role in the rejection of tumors and cells infected by viruses.

Interferons

A group of signaling proteins made and released by host cells in response to the presence of pathogens, such as viruses, bacteria, or tumor cells.