Economics MCQs

Page No. 288

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


a Unchanged


b Larger


cSmaller


dUnstable


View Answer Larger

Banks create money by ?


a printing it


b issuing debit cards


caccepting cheques


dlending out part of their deposits



Money has 3 main function they are __________ and __________?


aIOU , inflation hedge store of value


bMedium of exchange inflation hedge store of value


cMedium of exchange unit of account store of value


d Medium of exchange unit of account store of value



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


a money market for the given level of the money supply


bmoney market for different combinations of interest rates and output


cgoods market for the given level of government spending


dgoods market for the given interest rate



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


amoney supply curve


bLM curve


cmoney demand curve


dIS curve


View Answer LM curve

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


a goods market for the given interest rate


bgoods market for the given level of government spending


cmoney market for the given level of the money supply


dmoney market for the given value of aggregate output



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


a incomes


boverseas investment


cimports


d interest rates


View Answer interest rates

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


afiscal drag


binvestment blight


ccrowding-out


dthe Thatcher effects


View Answer crowding-out

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?


aa hyperinflation


ba depression


cstagflation


da recession


View Answer a hyperinflation

If the investment demand curve is vertical ?


aboth monetary and fiscal policy are ineffective


bmonetary policy is effective but fiscal policy is ineffective


c monetary policy is ineffective but fiscal policy is effective


d both monetary and fiscal policy are effective



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