Question # 1

Money or paper currency serves at least _______ functions.

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Three

Four

Five

Seven

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

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up ; right

up ; left

down ;left

down ; right

"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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Weaken fiscal policy

Avoid monetary policy errors

Strengthen the impact of monetary policy

Ensure the independence of the central bank

An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate

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right ; falls

right ; rises

left ; falls

left ; rises

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

An increase in money demand other thing equal shifts the ____ curve to the___

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IS ; right

IS ; Left

LM ; Left

LM ; right

Under system fixed exchange rates which of the following policies promotes internal balance for a nation.

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Fiscal policy

Monetary policy

Both fiscal policy and monetary policy

Neither fiscal policy nor monetary policy

The money multiple tells us teh ultimate increase in.

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The income level due to an increase in the money base

The money supply due to an increase in the money base.

The money supply due to an increase in the income level

The income level due to an increase in the money supply

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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up ; left

up ; right

down ; left

down ; right

Which of the following is not an important variable in growth accounting calculations.

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Productivity growth

Money supply growth

Labor growth

Capital growth

Those who favor setting the target rate of inflation at about 3% believe.

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The cost of moderate inflation can be minimized by indexing the tax system and bonds

that the cost of going to 0% is very low

That moderate inflation increases money illusion

Believe that moderate inflation aggravates the time inconsistency problem

The ratio of debt to GDP will be larger

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The lower the real interest rate

The lower the growth rate of output

The lower the in initial debt ratio

The lower the ratio of the primary deficit to GDP

The budget deficit tends to decrease when

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GDP increases

GDP decreases rapidly

GDP remains unchanged

GDP decreases slightly

In economics money refers to

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Income

Wealth

Assets use and accepted an payment

Currency

Which of the following would qualify as an aggregate demand shocks.

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An unexpected increase in oil prices

A seasonally expected increase in oil prices

An unexpected reduction in consumer confidence

an anticipated tax cut

When your grandmother keeps her savings hidden under her mattress she is using money as.

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a standard of deferred panyment

A comfortable thing for sleeping

A medium of exchange

A store of value

To move from point E to point E1 is consistent with.

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Expectations of a constant price level

Adaptive expectations that have no adjustment for the period immediately following a change in the actual price

Rational expectations and NCM

A and B

An example of discretionary fiscal policy would be.

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The operation of the welfare sate

The operation of the processive federal income tax

A tax cut adopted to stimulate consumption

An interest rate out in plummeted to stimulate consumption

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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Money demand rises proportionately to the rise in wealth.

Money demand rises, but less than proportionately to the rise in wealth.

The overall effect in ambiguous

Money demand declines

The equilibrium level of income is.

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Rs. 360

Rs.600

Rs.440

Rs.500

If the Central Bank wanted to decrease the quantity of money held by the public it would.

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Sell government securities

Buy government securities

Lower the legal reserve requirement

Raise taxes

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