Economics MCQs

Page No. 280

The speculative demand for money occurs when ?


a. Individuals hold money just in case an emergency happens


b Individuals hold money to buy things


cIndividuals hold money rather than other assets because they are worried about the price of the other assets falling


d Individuals hold money to shop



A reduction in the money supply is likely to ?


aReduce the interest rate


b Increase the interest rate


cIncrease inflation


dDecrease deflation



A fall in interest rates is likely to ?


a Increase aggregate demand


bIncrease savings


c Decrease consumption


dDecrease exports



The precautionary demand for money is ?


a An idle because


b An active balance


cDirectly related to interest rates


d Inversely related to income


View Answer An idle because

If an increase in investment leads to a bigger increase in national income this called the ?


aAccelerator


bAggregate demand


c Monetarism


d Multiplier


View Answer Aggregate demand

Investment is ?


aAn injection that increases aggregate demand


b A withdrawal that increase aggregate demand


cAn injection that decreases aggregate demand


dA withdrawal that decrease aggregate



Investment depends mainly on ?


aPast levels of income


b Future expected profits


cPresent national income levels


dHistoric data



An increase in interest rates ?


aIs likely to reduce savings


b Is likely to reduce the external value of the currency


cLeads to a shift in the MEC schedule


d Leads to a movement along the MEC schedule



An increase in investment is most likely to be caused by ?


a Lower interest rates


b Lower national income


cA decrease in the marginal propensity to consume


dAn increase in withdrawals



Friedman’s theory of consumption focuses on ?


aPast income


bCurrent income


cDisposable income


dpermanent income


View Answer permanent income

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