MCQOPTIONS
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MCQOPTIONS
This section includes 67 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 51. |
Equilibrium in the Money market will change if there is ? |
| A. | a change in the real money supply |
| B. | a change in real income |
| C. | a change in competition in the banking industry |
| D. | any of the above |
| Answer» E. | |
| 52. |
Each point on the LM curve represents the equilibrium point in the ? |
| A. | money market for the given level of the money supply |
| B. | money market for different combinations of interest rates and output |
| C. | goods market for the given level of government spending |
| D. | goods market for the given interest rate |
| Answer» C. goods market for the given level of government spending | |
| 53. |
Each point on the IS curve represents the equilibrium point in the ? |
| A. | goods market for the given interest rate |
| B. | goods market for the given level of government spending |
| C. | money market for the given level of the money supply |
| D. | money market for the given value of aggregate output |
| Answer» B. goods market for the given level of government spending | |
| 54. |
Commodity money ? |
| A. | has no intrinsic value |
| B. | has intrinsic value |
| C. | is used exclusively in the economies of western Europe and north America |
| D. | is used as reserves to back fiat money |
| Answer» C. is used exclusively in the economies of western Europe and north America | |
| 55. |
Central banks prefer to fix the ____ and accept the resulting _____? |
| A. | demand for money, interest rate |
| B. | interest rate equilibrium money supply |
| C. | demand for money equilibrium money supply |
| D. | interest rate, demand for money |
| Answer» C. demand for money equilibrium money supply | |
| 56. |
Banks create money by ? |
| A. | printing it |
| B. | issuing debit cards |
| C. | accepting cheques |
| D. | lending out part of their deposits |
| Answer» E. | |
| 57. |
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 ? |
| A. | Money supply will increase because Banca Solida will increase its loans |
| B. | The effect on money supply cannot be determined from the information given |
| C. | Money supply will decrease because the loans will have to be repaid |
| D. | Money supply will be unchanged because the central bank has made no policy changes |
| Answer» B. The effect on money supply cannot be determined from the information given | |
| 58. |
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 ? |
| A. | increase the money supply because it is now cheaper for banks to borrow from the central bank |
| B. | decrease the money supply because it will now be more expensive for business firms and consumers to borrow money |
| C. | Not change the money supply because banks already have excess reserves they cannot lend |
| D. | Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities |
| Answer» D. Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities | |
| 59. |
An item designated as money that is intrinsically worthless is ? |
| A. | precious metals |
| B. | commodity money |
| C. | fiat money |
| D. | barter items |
| Answer» D. barter items | |
| 60. |
An increase in the money supply aimed at increasing aggregate output is referred to as ? |
| A. | contractionary fiscal policy |
| B. | expansionary monetary policy |
| C. | contractionary monetary policy |
| D. | expansionary fiscal policy |
| Answer» C. contractionary monetary policy | |
| 61. |
An example of fiat money is ? |
| A. | Paper euros |
| B. | gold |
| C. | Silver coins |
| D. | cigarettes |
| Answer» B. gold | |
| 62. |
An example of an expansionary monetary policy is ? |
| A. | a reduction in the taxes banks pay on their profits. |
| B. | an increase in the required reserve ratio |
| C. | an increase in the discount rate |
| D. | the Central bank buying government securities in the open market |
| Answer» E. | |
| 63. |
According to the simple Keynesian view the aggregate supply curve is ? |
| A. | downward sloping over all levels of output |
| B. | upward sloping over all levels of output |
| C. | horizontal until it reaches full capacity and then becomes vertical |
| D. | vertical until it reaches full capacity and then becomes horizontal |
| Answer» D. vertical until it reaches full capacity and then becomes horizontal | |
| 64. |
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. | reduction, increase |
| B. | reduction, reduction |
| C. | increase, reduction |
| D. | increase , increase |
| Answer» D. increase , increase | |
| 65. |
A fall in investment demand can result from ? |
| A. | higher interest rates |
| B. | lower expected future profits |
| C. | more expensive capital goods |
| D. | All of the above |
| Answer» E. | |
| 66. |
A checking deposit in a bank in considered _________ of that bank? |
| A. | an asset |
| B. | capital |
| C. | net worth |
| D. | a liability |
| Answer» E. | |
| 67. |
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? |
| A. | reduce |
| B. | have no effect on |
| C. | increase |
| D. | double |
| Answer» B. have no effect on | |