| 1 |
If the central bank prints more 10 billion and spends them then as a direct result of this action.
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A. M1 and M2 both increases
B. Neighed M1 nor M2 increase
C. M1 increase but M2 does not
D. M2 increased but M1 does not.
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| 2 |
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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| 3 |
Total utility of a commodity is measured by which price of that commodity.
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A. Value in use.
B. Value in exchange
C. Both of above
D. None of above
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| 4 |
Time lags which often erode effectiveness of monetary and fiscal policy measures represent.
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A. The change in export and import price.
B. Delays in the response of the economy to stabilization policy.
C. The foreign response to price changes
D. The change in exchang erates
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| 5 |
The implementation lag for monetary policy is generally
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A. Much longer than it is for fiscal policy
B. Unrelated to central bank action
C. The same as it is for fiscal policy
D. Much shorter than it is for fiscal policy.
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| 6 |
"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.
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A. Upward
B. Down ward
C. To be zero
D. To match inflation
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| 7 |
A major advantage of monetary over fiscal policy is that monetary policty.
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A. Can be put into effect more quickly
B. Affects all sectors of the economy equally
C. Authorities are quicker to see the need for policy
D. Has a more direct and predictable impact on spending.
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| 8 |
"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.
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A. Income growth
B. Unemployment
C. Money growth
D. Taxes
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| 9 |
If the original money supply is MSo and the original demand for money is MDo then
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A. The equilibrium interest rate and savings are 5% and 50
B. The money supply is 200 and equilibrium income is 500
C. The equilibrium interest rate and income are 5% and 600
D. The speculative demand is 25
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| 10 |
When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.
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A. 0.25
B. 4
C. 0.4
D. Rs.4 billion
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| 11 |
What is the significance of underestimating transactions money.
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A. Monetary policy will be over simulating the economy
B. Monetary policy will be putting a drag on the economy
C. there is a need for money that the central bank should be meating.
D. The economy has too much money and there frore not enough spending.
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| 12 |
in the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.
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A. up ; left
B. up ; right
C. down ; left
D. down ; right
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| 13 |
A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___
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A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall
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| 14 |
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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| 15 |
In the Keynesian cross diagram a decrease in investment spending because companies become more pessimistic 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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| 16 |
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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| 17 |
During period of inflation
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A. Those people who have fixed incomes benefit
B. Every one's real income falls
C. those people who enter long term wage agreements benefit
D. Those people whose real income rises faster than the general price level benefit
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| 18 |
Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.
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A. Panel a
B. Panel d
C. Panel b
D. Panel e
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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 |
An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.
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A. Cheaper ; decline
B. Cheaper ; rise
C. dearer ; decline
D. dearer ; rise
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