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.Management Sciences
Category: Money, Interest Rates And Output
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
If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, _________ will occur?
A. a hyperinflation
B. a depression
C. stagflation
D. a recession
If there is a general shortage of liquidity in the money market then ?
A. The banks will increase their lending
B. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will fall and the central bank may be expected to reduce the supply of liquidity to the banks
C. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will rise and the long-term interest rate may be expected to rise as a result
D. the long-term interest rate in the economy will rise and the central bank will raise its interest rate in response
E. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will rise and the central bank may be expected to increase the supply of liquidity to the banks.
Banks create money by ?
A. printing it
B. issuing debit cards
C. accepting cheques
D. lending out part of their deposits
One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?
A. rise; increase, increase
B. rise, falls, increase
C. rise, increase, falls
D. rise, falls, falls
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
Which of the following policy actions by a central bank is likely to increase the money supply ?
A. Increasing the refinancing rate
B. All of these will increase the money supply
C. Buying government bonds in open market operations
D. Increasing reserve requirements
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
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
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
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