Question # 1

If the demand for money increase relative to the supply of money

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Interest rates will trend upward

Interest rates will trend downward

Interest rates are not affected by increases in money demand

Interest rates will behave randomly

The largest source of tax revenue for the federal government is.

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The personal income tax

The social security tax

The property tax

The sales tax

Money is

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An indicator of the scarcity of wants

Anything that sellers accept i exchange for goods and services.

A form of barter

Anything that the government classifies as a trade commodity.

If a perfectly competitive industry is in long run equilibrium all firms will

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Have a marginal costs

Have identical supply curves

Operate at the point where marginal cost just covers all variable costs

Have equal fixed costs

The purpose of fiscal policy is to

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Alter the direction of the economy

Change people's attitudes toward governemnt

Educate people as to the importance of economics

Offer insight into the way thing work

What's the most common way for a central bank to reduce the money supply.

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Collect higher taxes

Sell bonds to the public

Buy bounds from the government

Buy bonds from the public

The budget deficit tends to decrease when

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GDP increases

GDP decreases rapidly

GDP remains unchanged

GDP decreases slightly

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

As a result of the increase in government expenditures disposable income increases by.

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Rs.10 billion

Rs.9 billion

Rs.20 billion

Rs.5 billion

A major advantage of monetary over fiscal policy is that monetary policty.

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Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

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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up ; rise

up ; fall

down ;rise

down ; fall

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

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increase ; increase

Increase ; decrease

decrease ; decrease

decrease ; increase

Per Capita income is obtained by dividing National income by

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Total labor Force in the country

Unemployed Youth in the country

Total population of that country

None

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

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Purchases ; decreases

sales ; increases

purchases ; increases

sales ; decreases

What major advantage of monetary policy over fiscal policy does this clipping underline.

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Monetary policy is more effective

Monetary policy is lss discriminatory

Monetary policy can influence interest rates

Monetary policy can be undertaken more quickly

The IS curve shifts to the left when

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Taxes increase

Government spending increase

The money supply increases

All of the above occur

Money and income are.

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Mirror image of each other

Two quite different concepts

Both measured as a per annum flow

Two ways of looking at the same thing.

Which of the following causes M1 demand is decrease.

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A fall in the tax rate

An increase in income

A fall in the interest rate

An increase in the use of credit cards

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

A major advantage of monetary over fiscal policy is that monetary policy

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Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

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The change in export and import price.

Delays in the response of the economy to stabilization policy.

The foreign response to price changes

The change in exchang erates

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