Question # 1

A shift in tastes toward Pakistan goods ________ net exports and causes the IS curve to shift to the.

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decreases ; right

decreases ; fall

increases ; rise

increases ; fall

A major advantage of monetary over fiscal policy is that monetary policty.

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Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

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A relative large increase in Y, a smaller increate n P

A relative large increase in P, a smaller increase in Y

Both Y and P increasing with an percentage

Only Y increase

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

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rise ; rise

rise ; fall

fall ; rise

fall ; fall

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

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demand ; right

demand ; left

supply ; right

supply ; left

The market price of bonds can fluctuate depending on

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How many bonds were sold

Who bought the bonds

The amount of the coupon

The interest rate

Disposable income is obtained by subtracting ________ taxes from personal income

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Indirect taxes

Direct taxes

Subsidies

None

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

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increases ; increase

increases ; decrease

decreases ; decreases

decreases ; increses

Weighted monetary aggregates

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Ignore the fact that some assets are more money like than others.

Are constructed by simply adding up the outstanding amounts of various types of asssets

Give greater weight to currency than to savings deposits

Value coins more than currency.

An autonomous increase in the value of the domestic exchange rate.

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Increases output net exports and the interest rate.

Decreases output net exports and the interest rate

Decreases output and net exports and increases the interest rate.

Increase output and decreases net exports and the interest rate.

A change in the money supply has a greater effect upon equilibrium income.

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The more interest sensitive private sector spending is.

The less interest sensitive private sector spending is.

The smaller the expenditure multiplier is

The more interest sensitive money holdings are to the rate of interest.

Knowledge of the money supply can lead to good predications of nominal GDP only

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If the price level is stable

If the money supply is stable

Over very short periods of time

If the determinants of velocity are known

"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.

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Income growth

Unemployment

Money growth

Taxes

The quantity of money demanded varies.

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Directly with both prices and output

Inversely with both prices and output

Directly with prices and inversely with output

Inversely with prices and directly with output

The government performs its redistribution function mainly through.

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Trade practice legislation against anticipative behavior

The provision of public goods

Taxes and transfer payments

Tariffs on imports

How do the banks gain from this corporate behavior.

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More loans can be made

Tax free profits can be made

Interest rates can be increased

By circumvent banking regulations

When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.

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Is unchaged

Increase by Rs.100,000

Increases by Rs. 1,000,000

None of these

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

A monetary action consistent with the central bank selling bonds in the open market would be.

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An increase in the reserve ratio

A reduction in the discount rate of interest

An increase in government spending.

a reduction in excise taxes

During period of inflation

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Those people who have fixed incomes benefit

Every one's real income falls

those people who enter long term wage agreements benefit

Those people whose real income rises faster than the general price level benefit

The limit of an economy's total productive capacity at any given time is set by

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The amount of money in circulation

Business demand for goods and services

The level of government spending and taxation

the quantity and quality of its productive resources

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