MCQs of Economics – Money, Interest Rates And Output

Money is:

Which of the following is not a function of money?

An example of fiat money is:

Commodity money:

Which of the following statements about money is not true?

Bance Solida has, in the past, always operated with a reserve ratio of 25 percent. It has now been taken over by Gung-Ho Bank Which operates with a reserve ration of 12½ percent, Assuming that Banca Solida adopts the business practices of its new owner, What will be the effect on money supply in the country in which Banca Solida operates?

If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is:

Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action?

Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of their

Which of the following policy actions by a central bank is likely to increase the money supply?

The refinancing rate is:

Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent?

Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits Rs 1,000 of currency in a bank

The three main tools of monetary policy are:

Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will:

If there is a general shortage of liquidity in the money market then:

Which one of the following is not true?

Government Securities with terms of more than one year are called:

An item designated as money that is intrinsically worthless is:

Money that a government has required has required to be accepted in settlement of debts is:

Which of the following is included in broad money, but not included in narrow money?

A checking deposit in a bank in considered ____ of that bank

Which of the following activities is one of the responsibilities of the Bank of England to the banking system?

The difference between a bank’s actual reserves and its required reserves is its:

As the required reserve ratio is decreased the money multiplier

A bank has excess reserves to lend but is unable to find anyone to borrow the money This will ____ the size of the money multiplier

Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to:

If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will:

When economies speak of the demand for money which of the following question are they asking ?

Which of the following events will lead to an increase in the demand for money?

Which of the following events will lead to a decrease in the equilibrium interest rate?

The main reason that people hold money to buy things is referred to as the:

The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the:

The opportunity cost of holding money is determined by:

The demand for money represents the idea that there is:

In terms of the demand for money the interest rate represents:

The chain of events that results from an expansionary monetary policy is:

The equilibrium level of aggregate output is determined in:

The interest rate is determined in:

An increase in the money supply aimed at increasing aggregate output is referred to as:

An example of an expansionary monetary policy is:

The interest rate:

If the investment demand curve is vertical:

For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to:

If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, ____ will occur

According to the simple keynesian view the aggregate supply curve is:

The idea the government spending causes a reduction in private investment is called:

If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will

The way in which government spending is supposed to reduce investment is by increasing:

If planned investment becomes more sensitive to interest rate changes the crowding out effect will

Each point on the IS curve represents the equilibrium point in the:

The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the:

The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the:

When the money supply increase

Each point on the LM curve represents the equilibrium point in the:

Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be _____ and the LM curve must be _____

Money has 3 main function they are ____ ____ and _____

The primary function of bank is to

Banks create money by:

The size of the money multiplier is determined by the marginal propensity to consume

The money supply is

If banks and the private sector decide to hold less cash the money multiplier will be:

Three variables affect the demand for money they are ____ ____ and _____

If the keep some money available in case I see a bargain this is an example of:

An increase in the price level will likely increase the demand for nominal money

When interest rate rise, other things equal, we can expect the quantity of real money holding to:

When real income increase other things equal we can expect the demand for real money holdings to:

M4 is a _____ measure of money and includes deposits at both ____ and _____

The monetary base is ____ and ____

If the central bank buys financial securities in the open market to increase the monetary base, this is and example of:

Equilibrium in the Money market will change if there is:

The money supply is controlled by using open market operations to determine the money multiplier and by using reserve requirements and the discount rate to determine the monetary base

Central banks prefer to fix the ____ and accept the resulting _____

One of the transmission mechanisms of monetary policy is through consumer demand when interest rates _____ household wealth _____ and consumption ______

A reduction in interest rates, causes an increases in the monetary base that results in an _____ in the availability of consumer credit and a _____ in the cost of consumer credit

A fall in investment demand can result from