Question # 1

During periods of rising inflation and rising interest rates we expect the demand for real cash to.

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rise

fall

not change

fluctuate

In a fixed exchange rate regime, the central bank will intervene by __ pounds to ______ the exchange rate.

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Selling, increase

buying , increase

selling, reduce

both b and c

If desired spending in the economy exceeds income we would expect.

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House hold to save more

Firm to produce less

Firms is produce more

the MPC to change

Adding up the quantities demanded of a good by different people facing the same price gives us the.

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Supply curve

Market demand curve

Demand curve

Market supply curve

Except for taxes to offset ___ taxes are.

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Imperfect competition , popular

Extremality's, distortionary

Inequality, a first best option

Poor health, unnecessary

Under floating exchange rates, expectations of higher interest rates are likely to cause an __________ of the exchange rate.

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Depreciation

Appreciation

fall

Devaluation

Moral Hazard means that the act of insuring __________ that the desired outcome will occur.

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Reduces the likelihood

Increase the likelihood

Guarantees

None of the above

In the absence of international capital controls, central banks set ______ to provide the correct incentive for speculators

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Money supply targets

Income policy

Interest rates

Inflation targets

The value of an asset depends upon

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Its scrap value

Its depreciation

The present value of the failure stream of income it can earn.

the cost of loans

Leakages from the circular flow are____ and _____

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Investment savings, government expenditure

Saving , taxes net of subsidies, imports

Consumption, investment , government expenditure.

Consumption, taxes, impports

The participation rate in the labour force is affected by

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Higher real wages

Lower fixed costs of working

Lower non labor income

All of the above

Bank create money by

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Printing it

Issuing debit cards

Accepting chequeens

Lending out part of their deposits

A reduction in interest rates, causes an increases in the monetary base that result in an_____ in the availability of consumer credit and a _ in the cost of consumer credit.

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Reduction, increases

reduction,reduction

increase, reduction

increases, increases

Women and non whiles on average receive lower comes than white men because.

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They tend to work in relatively unskilled jobs

Educational disadvantage

Firms are reluctant to invest in training

All of the above

In the ERM, each country fixed ___ against each other ERM participant collectively the group._____ against the rest of the world.

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A nominal exchange rate, floated

A real exchange rate, pegged

a purchasing power parity, pegged

a real exchange rate, floated

When capital mobility is perfect, interest rate differentials will tend to be offset by

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Price differences.

Balance of payments differences.

Current account differences.

Expected exchange rate changes

Aggregate demand without a foreign sector is the sum of.

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c+1

C+G

1+G

C+!+G

Market failure may arise because of.

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Imperfect competition

Taxation

Externalities

All of the above

In the UK mergers can be referred to the competition commission of they create a firm with _______ of the market.

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15%

20%

25%

30%

The extra utility from consuming one more unit of a good is called.

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Marginal utility

Additional utility

surplus utility

Bonus utility

If a long average cost rises, output rises from left to right this is an example of.

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Increasing returns to scale

Decreasing returns to scale.

Constant returns to scale

the minimum efficient scale

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