Question # 1

A change in the money supply has a greater effect upon equilibrium income.

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The more interest sensitive private sector spending is.

The less interest sensitive private sector spending is.

The smaller the expenditure multiplier is

The more interest sensitive money holdings are to the rate of interest.

A decrease in the legal reserve ratio from 25% to 20% will

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Result in light money

Be contractionary

Increases excess reserves and the potential money multiplier

Decrease excess reserves and the potential money multiplier

The board pumps money out of the economy by

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Buying bonds

Selling bond

Creating cash

Lowering the reserve requirements.

Credit constitutes.

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Saving made available to borrowers

A form of liquid asset

bank loans converted into commodity money

Money used as a standard of deferred payment.

When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.

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more ; iincreases

less ; increases

more ; decreases

more ; increases

A major advantage of monetary over fiscal policy is that monetary policty.

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Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

Tax incidence is the

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Ultimate distribution of a tax's burden

Measure of the inpat the tax has on employment and output

Behavior of shifting the tax to another party

Structure of the tax

Money is

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An indicator of the scarcity of wants

Anything that sellers accept i exchange for goods and services.

A form of barter

Anything that the government classifies as a trade commodity.

Which of the following persons would be considered unemployed.

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a house wife

A person who worked more than 20 hours in a family owned business

A 15 years old looking for summer employment

A recent college graduate looking for her fist job

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

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increase ; increase

Increase ; decrease

decrease ; decrease

decrease ; increase

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

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Demand ; right

demand ; left

supply ; right

supply ; left

During period of inflation

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Those people who have fixed incomes benefit

Every one's real income falls

those people who enter long term wage agreements benefit

Those people whose real income rises faster than the general price level benefit

In the Keynesian cross diagram a decline in autonomous consumer expenditure causes the aggregate demand function to shift down The equilibrium level of aggregate output to ___________ and the IS curve to shift to the

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rise,; left

rise ;right

fall ; left

fall ; right

According to the supply side model a reduction in the tax rate.

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Could reduce the size of any budget deficit

Would have no effect on output

Would have no effect on consumption

None of the above

"Far better for central bankers to get out of the fine tuning business instead they should d try to keep.

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Taxes low

Budgets balanced

Money growth low

Government spending in check

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

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rise ; LM ;right

rise ; IS ; right

fall ; LM, Left

rise ; IS ; Left

The parable of Riding a Switchback suggests that stabilizing policy.

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Is not sufficiently stimulating or contra citing the economy at any time

Is desirable

Is effective

Is stimulating or contracting the economy at the wrong times.

What is the significance of underestimating transactions money.

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Monetary policy will be over simulating the economy

Monetary policy will be putting a drag on the economy

there is a need for money that the central bank should be meating.

The economy has too much money and there frore not enough spending.

As the interest sensitivity of investment spending increase.

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Monetary policy has a larger effect on output

Fiscal policy has a larger effect on output

The multiplier increases

All of the above

In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.

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up ; left

up ; right

down ; left

down ; right

Large difference is inflation rates among countries are almost always the result of large difference in.

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Productivity

Real income growth

The growth rates of real money demand

The growth rates of nominal money supplies

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