| 1 |
Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.
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A. Increase the money growth rate slightly
B. Decrease the money growth rate slightly
C.Leave the money supply growth unchanged
D. Enact a one time slight decrease in the money supply
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| 2 |
"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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A. Tax rates
B. The money supply
C.Aggregate demand
D. Government spending
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| 3 |
A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______
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A. rise ; LM ;right
B. rise ; IS ; right
C.Fall ; LM ; left
D. rise ;IS; right
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| 4 |
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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| 5 |
A state of government bonds by the central bank should cause
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A. Bond prices to rise
B. an increase in the supply of money
C.An increase in chartered banks loans
D. A decrease in reserves of the banking system.
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| 6 |
What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.
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A. The multiplier
B. The money multiplier
C.Required reserve ratio
D. Open market operations
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| 7 |
Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.
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A. Increase G by Rs.1,000
B. Decrease G by Rs.250
C.Increase G by less than Rs.100
D. Decrease G by more than Rs.250 but less than Rs.1000
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| 8 |
"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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| 9 |
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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A. rise ; rise
B. rise; fall
C.fall ; rise
D. fall ; fall
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| 10 |
"Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.
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A. The multiplier
B. The money multiplier
C.Required reserve ratio
D. Open market operations
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| 11 |
According to Marshall the basis of consumer surplus is.
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A. Law of diminishing marginal utility.
B. Law of equal marginal utility
C.Law of proportions
D. All of the above
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| 12 |
The main source of interest profits for banks is.
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A. Checking account fees
B. Loans
C.Government securities
D. Savigng accounts
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| 13 |
A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the ___ curve to the __________
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A. rise ; LM ;right
B. rise ; IS ; right
C.Fall ; LM ; left
D. rise ;IS; Left
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| 14 |
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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| 15 |
During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.
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A. Stimulate the economy and increase empolyment.
B. Result in additional recessionary declines in employment and income
C.Stimulator defiance spending
D. Have an automatic stabilizing impact upon the economy
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| 16 |
The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.
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A. Milton Friedman
B. Ronald reagan
C.Margaret Thatcher
D. John Maynard Keynes
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| 17 |
The use of money is more efficient than barter because the introduction of money
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A. Reduces the need for economic specialization
B. Reduces the need to exchange goods
C.Reduce the need for other stores of value
D. Reduces transaction costs
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| 18 |
In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______
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A. rise ; left
B. rise ; right
C.fall ; left
D. fall ; right
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| 19 |
The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.
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A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C.25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
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| 20 |
A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the
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A. right ; left
B. right ; right
C.left ; left
D. left ; right
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