Question # 1

A decline in the value of the rupee makes Pakistan goods cheaper relative to foreign goods, resulting in a _________ in net exports and a ________shifts of the IS curve.

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fall ; leftward

rise ; leftward

fall ; rightward

rise ; rightward

There are ______ methods of measuring GDP

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Three

Four

Five

None

The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.

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Crowding out

Recognition lag

Public sector borrowing requirement

Fiscal drag

By financial crowding our economists mean

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What the government borrows cannot be used for private investment

Government borrowing drives up interest rates.

Bank of England controls on commercial bank lending

Credit rationing

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

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decreases ; rise

decreases ; fall

Increases ; rise

Increase ; fall

The rate of which central bank lends to commercial banks is known as

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reserve rate

Discount rate

Open market operation

None

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

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Net exports LM right

Net exports LM left

Money demand IS right

Money demand LM left

A monetary action consistent with the central bank selling bonds in the open market would be.

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An increase in the reserve ratio

A reduction in the discount rate of interest

An increase in government spending.

a reduction in excise taxes

The intersection of the IS and LM curves captures.

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The equilibrium of the demand and supply sides of the economy

the equivalence of monetary and fiscal policy

Joint equilibrium in the goods and money markets

All of the above

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

The use of money is more efficient than barter because the introduction of money

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Reduces the need for economic specialization

Reduces the need to exchange goods

Reduce the need for other stores of value

Reduces transaction costs

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

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A relative large increase in Y, a smaller increate n P

A relative large increase in P, a smaller increase in Y

Both Y and P increasing with an percentage

Only Y increase

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

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rise ; rise

rise; fall

fall ; rise

fall ; fall

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

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Tax rates

The money supply

Aggregate demand

Government spending

A checking deposit held at a commercial bank is considered ______ of that bank.

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An asset

Net worth

a liability

Capital

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

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Increases ; increases ; right

Increases ; decreases ; left

decreases ; increases ; left

decreases ; decreases ; right

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.

An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.

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rise ; rise

rise ; fall

fall ; rise

fall ; fall

An autonomous rise in the value of the Rupee makes Pakistan goods _____ expensive relative to foresight goods which ______ net exports

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Less ; decreases

Less ; increases

More ; decreases

more ; increases

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

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