IX. Say whether the following statements are true or false. Extend your idea

1. There is no possibility that the bank of England can go bankrupt because it always meet withdrawals by its depositors by printing new banknotes a little more quickly.

2. The central bank can reduce the money supply by reducing the amount of cash that the commercial banks must hold as reserves.

3. The central bank can induce the commercial banks voluntarily to hold additional cash reserves by setting the discount rate at penalty level.

4. Open market operations are a means by which the Bank alters the monetary base, banks' cash reserves, deposit lending, and the money supply.

5. When you've tried everywhere else to get money for your holidays, you go to the lender of last resort.

6. Public sector borrowing requirement (PSBR) must be met by printing money; therefore there is a direct link between the size of PSBR and money supply.

7. Money is a nominal variable, not a real variable.

8. The existence of uncertainty increases the demand for bonds.

9. The best measure of the opportunity cost of holding money is the real interest rate.

10. An excess demand for money must be exactly matched by an excess supply of bonds: otherwise people would be planning to hold more wealth than they really possess.

X. Complete the sentences with prepositions:

1) Of the total capital, 19 % is expected to be reserved a) … strategic investors.

2) If you see a computer b) … under $400, you should snap it c) ….

3) Some profits of the firms are usually retained, either to be spent d) … the expansion of is a special loan f) … people who want to buy a house.

4) Many people these days buy things g) … credit instead of buying h) … cash.

5) A mortgage is a special loan e)... people who want to buy a house.

6) High interest rate has an impact i) … the consumer’s ability to buy a new home.

7) Changing interest rates is a method that is used quite frequently j) … slowing k) … or speeding l) … the economy.

8) The interest rate m) … the central bank will influence the rates commercial bank set n) … their customers.

9) If there is a limited amount of money available, the suppliers (the banks) will charge a higher price (the interest rate) as demand o) … money increases.

10) Exchange rate mechanisms are ways to control the value of the national currency

p) … other currencies.

XI. Read the text and choose the correct word or words from A, B, C or D to fill in each gap: