Economics MCQs

Page No. 288

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


a Unchanged

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b Larger

✓


cSmaller

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dUnstable

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View Answer Larger

Banks create money by ?


a printing it

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b issuing debit cards

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caccepting cheques

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dlending out part of their deposits

✓



Money has 3 main function they are __________ and __________?


aIOU , inflation hedge store of value

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bMedium of exchange inflation hedge store of value

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cMedium of exchange unit of account store of value

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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

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bmoney market for different combinations of interest rates and output

✓


cgoods market for the given level of government spending

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dgoods market for the given interest rate

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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

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bLM curve

✓


cmoney demand curve

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dIS curve

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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

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cmoney market for the given level of the money supply

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dmoney market for the given value of aggregate output

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


a incomes

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boverseas investment

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cimports

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d interest rates

✓


View Answer interest rates

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


afiscal drag

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binvestment blight

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ccrowding-out

✓


dthe Thatcher effects

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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

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cstagflation

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da recession

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View Answer a hyperinflation

If the investment demand curve is vertical ?


aboth monetary and fiscal policy are ineffective

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bmonetary policy is effective but fiscal policy is ineffective

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c monetary policy is ineffective but fiscal policy is effective

✓


d both monetary and fiscal policy are effective

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