MCQOPTIONS
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MCQOPTIONS
This section includes 72 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs 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. |
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 | |
| 53. |
When real income increases other things equal we can expect the demand for real money holdings to ? |
| A. | fall |
| B. | not change |
| C. | increase |
| D. | None of these |
| Answer» D. None of these | |
| 54. |
The monetary base is ________ and _________? |
| A. | bank deposits, building society deposits |
| B. | Currency in circulation, banks cash reserves |
| C. | retail sight deposits building society deposits |
| D. | retail deposits, wholesale deposits |
| Answer» C. retail sight deposits building society deposits | |
| 55. |
The money supply is ? |
| A. | State Bank of Pakistan Issue Department |
| B. | Money + bank cards + credit cards |
| C. | Cheques + money + bank cards + credit cards |
| D. | Currency in circulation plus bank deposits |
| Answer» E. | |
| 56. |
When the money supply increase ? |
| A. | the economy moves up the LM curve |
| B. | The LM curves shifts to the left |
| C. | The economy moves down the LM curve |
| D. | The LM curve shift to the right |
| Answer» E. | |
| 57. |
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 __________? |
| A. | flat; steep |
| B. | flat; flat |
| C. | steep; flat |
| D. | steep; steep |
| Answer» B. flat; flat | |
| 58. |
The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ? |
| A. | aggregate supply curve |
| B. | LM curve |
| C. | aggregate demand curve |
| D. | IS curve |
| Answer» C. aggregate demand curve | |
| 59. |
If planned investment becomes more sensitive to interest rate changes the crowding out effect will ? |
| A. | be reduced |
| B. | not be affected |
| C. | fall to zero |
| D. | be increased |
| Answer» E. | |
| 60. |
Which of the following events will lead to a decrease in the equilibrium interest rate ? |
| A. | A sale of government securities by the central bank |
| B. | An increase in the level of aggregate output |
| C. | An increase in the discount rate |
| D. | A decrease in the price level |
| Answer» E. | |
| 61. |
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 ? |
| A. | Transactions motive |
| B. | precautionary motive |
| C. | profit motive |
| D. | speculation motive |
| Answer» E. | |
| 62. |
Which of the following activities is one of the responsibilities of the Bank of England to the banking system ? |
| A. | Assisting Banks that are in a difficult financial position |
| B. | Auditing the various agencies and department of the government |
| C. | Loaning money to other countries that are friendly to the UK. |
| D. | Issuing new bonds to finance the PSBR. |
| Answer» B. Auditing the various agencies and department of the government | |
| 63. |
When economies speak of the demand for money which of the following are they asking ? |
| A. | How much cash do you wish you could have? |
| B. | How much wealth would you like? |
| C. | How much income would you like to earn? |
| D. | What proportion of your financial assets do you want to hold in non-interest-bearing forms |
| Answer» E. | |
| 64. |
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 | |
| 65. |
Which of the following is included in broad money, but not included in narrow money ? |
| A. | savings accounts |
| B. | Travelers checks |
| C. | Currency held outside banks |
| D. | Automatic-transfer savings accounts |
| Answer» B. Travelers checks | |
| 66. |
The refinancing rate is ? |
| A. | The interest rate at Which commercial banks lend to and borrow from each other |
| B. | The interest rate the European Central Bank pays on reserves |
| C. | The interest rates the public pays when borrowing from banks |
| D. | The interest rates the European Central Bank charges on loans to banks |
| E. | He interests rate banks pay on the public’s deposits |
| Answer» E. He interests rate banks pay on the public’s deposits | |
| 67. |
Money is ? |
| A. | The value of all coins and currency in circulation at any time |
| B. | Anything that is generally accepted as a medium of exchange |
| C. | The same as income |
| D. | All of the above |
| Answer» C. The same as income | |
| 68. |
Government Securities with terms of more than one year are called ? |
| A. | bills of exchanges |
| B. | government bonds |
| C. | Treasury bills |
| D. | Capital bills |
| Answer» C. Treasury bills | |
| 69. |
Money has 3 main function they are __________ and __________? |
| A. | IOU , inflation hedge store of value |
| B. | Medium of exchange inflation hedge store of value |
| C. | Medium of exchange unit of account IOU |
| D. | Medium of exchange unit of account store of value |
| E. | Medium of exchange unit of account store of value |
| Answer» F. | |
| 70. |
An example of fiat money is ? |
| A. | Paper euros |
| B. | gold |
| C. | Silver coins |
| D. | cigarettes |
| Answer» B. gold | |
| 71. |
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 them ? |
| A. | assets |
| B. | deposits |
| C. | loans |
| D. | government bonds |
| Answer» C. loans | |
| 72. |
If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ? |
| A. | 4 |
| B. | 20 |
| C. | 25 |
| D. | 5 |
| Answer» E. | |