Question # 1

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

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Recognition ; shorter

Recognition ; longer

Implementation ; shorter

Implementation ; longer

When there is no change in central banking holding of international reserve balances a country's

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Trae balance always equals 0

Current account balance always equals 0

Capital account balance always equals 0

Balance of payments always equal 0

When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.

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more ; iincreases

less ; increases

more ; decreases

more ; increases

If the Central Bank wanted to decrease the quantity of money held by the public it would.

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Sell government securities

Buy government securities

Lower the legal reserve requirement

Raise taxes

The intersection of the IS and LM curves captures.

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The equilibrium of the demand and supply sides of the economy

the equivalence of monetary and fiscal policy

Joint equilibrium in the goods and money markets

All of the above

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

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Bank's line of credit

Reserve ratio

Current ratio

Money multipiler

Intermediate goods are meant for

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Direct use by the consumers

Further processing

The term do not exist

None

The equilibrium level of income is.

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Rs. 360

Rs.600

Rs.440

Rs.500

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

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Left ward ; LM

Right ; LM

Left ward ; IS

Left ward ; AD

When your grandmother keeps her savings hidden under her mattress she is using money as.

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a standard of deferred panyment

A comfortable thing for sleeping

A medium of exchange

A store of value

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

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Upward

Down ward

To be zero

To match inflation

The rate of which central bank lends to commercial banks is known as

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reserve rate

Discount rate

Open market operation

None

The situation in which the imports are greater than exports is termed as.

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Trade surplus

Trade deficit

Budget surplus

None

A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the

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decreases ; right

decrease ; left

increase ; right

increases ; left

Short run contractionary Fiscal policy would result in.

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Aggregate demand moving to the right

Aggregate supply moving to the right

Aggregate demand moving to the left

Aggregate supply moving to the left

If the demand for money increase relative to the supply of money

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Interest rates will trend upward

Interest rates will trend downward

Interest rates are not affected by increases in money demand

Interest rates will behave randomly

One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.

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store of value

Unit of account

Medium of exchange

Standard of deferred payment

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

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M1 is larger than M2

The demand for M2 is more stable

M1 includes more liquid assets the M2

None of the above answers is correct.

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

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The multiplier

The money multiplier

Required reserve ratio

Open market operations

A monetary expansion is characterized by

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Rising output and interest rates

Rising output and falling interest rates.

Constant output and falling interest rates

Falling output and interest rates

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

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right ; left

right ; right

left ; left

left ; right

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