Category: Monetary, Fiscal And Incomes Policy, And Inflation

I- an externally dependent banking system
II- a poorly developed securities market
III- a low percentage of demand deposits divided by the total money supply
IV- the relative insensitivity of investment and employment to monetary policies

A. I and II only
B. III and IV only
C. I, II and III only
D. I, II , III and IV

A. reserve, unemployment
B. money supply, interest rate
C. taxes, exchange rate
D. stock price, minimum wage

I- tax holidays
II- accelerated depreciation
III- import duty relief
IV- lower tax rates for reinvested business profits

A. I and II only
B. III and IV only
C. I, II and III only
D. I, II, III, and IV

A. demand for government spending on public goods goes due to lack of financial backup through tax collection
B. consumer business and government demand for goods and services in excess of an economy’s capacity to produce
C. a shortage of demand for goods and services in excess of supply during depression
D. demand for public goods is greater than demand for consumer goods

I- banks engage in non-price rationing of loans
II- banks face pressure for loans to those with political connections
III- banks charge a high premium on foreign investments
IV- banks depend on foreign banks to set interest rates

A. I and II only
B. III and IV only
C. I, II and III only
D. I, II , III and IV

I- consumer price index (CPI)
II- GDP deflator
III- current account
IV- depreciation

A. I and II only
B. I and III only
C. III and IV only
D. I, II and III

I- an increase in aggregate spending will eliminate the recession
II- a decrease in aggregate spending will reduce inflation
III- government faces contradictory goals
IV- the central bank decease money supply to reduce inflation

A. I and II only
B. III and IV only
C. I ,II and III only
D. I , II , III, and IV

A. demand pull inflation tax elasticity
B. interest rates, financial liberalization
C. interest rates, tax rates
D. tax rates, government spending

I- inflation weakens the creation of credit and capital markets
II- inflation distorts business behavior especially investment behavior
III- inflation increase the price of foreign goods relative to domestic goods
IV- Inflation imposes a tax on the holders of money

A. I and II only
B. III and IV only
C. I, II and IV only
D. I, II and III only

A. ratchet inflation
B. inflationary expectations
C. import substitution
D. demand pull inflation