| 1 |
How do the banks gain from this corporate behavior.
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A. More loans can be made
B. Tax free profits can be made
C. Interest rates can be increased
D. By circumvent banking regulations
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| 2 |
Large difference is inflation rates among countries are almost always the result of large difference in.
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A. Productivity
B. Real income growth
C. The growth rates of real money demand
D. The growth rates of nominal money supplies
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| 3 |
In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift _____ and the equilibrium level of aggregate output to.
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A. up ; rise
B. up ; fall
C. down ;rise
D. down ; fall
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| 4 |
"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.
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A. A higher interests rate
B. A higher reserve requirement
C. a decrease in the money supply
D. An increase in the money supply
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| 5 |
In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.
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A. IS ;right
B. IS ;Left
C. LM ; Left
D. LM ; Right
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| 6 |
Which of the followig does not shift the IS curve .
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A. An increases in autonomous consumption
B. An increase in government spending.
C. A decline in government spending
D. A fall in theinterest rate
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| 7 |
What major advantage of monetary policy over fiscal policy does this clipping underline.
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A. Monetary policy is more effective
B. Monetary policy is lss discriminatory
C. Monetary policy can influence interest rates
D. Monetary policy can be undertaken more quickly
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| 8 |
If the nominal money supply doubles while real money demand is unchanged what happens to the price level.
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A. The price level increases by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
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| 9 |
Under a fixed exchange rate system an expansionary fiscal policy leads to a
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A. Trade account deficit and a capital account surplus.
B. Trade account deficit and a capital account deficit
C. Trade account surplus and a capital account surplus
D. Trade account surplus and a capital accoundt deficit
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| 10 |
The relation between M2 and inflation is tighter than the relation between M1 and inflation because.
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A. M1 is larger than M2
B. The demand for M2 is more stable
C. M1 includes more liquid assets the M2
D. None of the above answers is correct.
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| 11 |
Other things equal a decrease in autonomous consumption shifts the _____ curve to the
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A. IS ; RIGHT
B. IS ; Left
C. LM ; Left
D. LF ; Right
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| 12 |
An example of nondiscretionary fiscal policy would be.
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A. The operation of the welfare state
B. A Federal jobs program adopted to stimulate consumption
C. A tax cut adopted to stimulate consumption
D. An interest rate cut implemented to stimulate consumption
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| 13 |
"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.
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A. Weaken fiscal policy
B. Avoid monetary policy errors
C. Strengthen the impact of monetary policy
D. Ensure the independence of the central bank
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| 14 |
In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to rise and the IS curve to shift to the
|
A. up ; right
B. up ; left
C. down ;left
D. down ; right
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| 15 |
Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.
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A. Money demand rises proportionately to the rise in wealth.
B. Money demand rises, but less than proportionately to the rise in wealth.
C. The overall effect in ambiguous
D. Money demand declines
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| 16 |
When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.
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A. more ; iincreases
B. less ; increases
C. more ; decreases
D. more ; increases
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| 17 |
Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if
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A. The IS curve shifts left ward
B. The IS curve shifts right ward
C. The money supply increase
D. Taxes are cut
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| 18 |
"Although he didn't say so, this may ultimately compet the central bank to resort increasingly to managing the money supply by managing banks excess cash reserves the stuff from which the banks create loans". How would the central bank manages these excess reserves.
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A. By buying bonds
B. By selling bonds
C. By changing reserve requirements
D. All of the above
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| 19 |
A decrease iin money demand other thing equal shifts the _____ curve to the
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A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
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| 20 |
A Political problem with discretionary fiscal policy is the.
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A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias
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