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.Management Sciences
Category: Money, Interest Rates And Output
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
If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?
A. Suffer even more
B. not be reduced as much as it would have been
C. be replaced by foreign investment
D. be replaced by consumer spending
Which of the following statements about money is not true ?
A. A debit card is not really money because it is only a means of transferring money between accounts
B. All the wealth that people hold, in whatever form, should be considered as money
C. Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in current accounts should be included in measures of money
D. In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not
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
In terms of the demand for money the interest rate represents ?
A. the rate at which current consumption can be exchanged for future consumption
B. the price of borrowing money
C. The opportunity cost of holding money
D. the return on money that is saved for the future
The three main tools of monetary policy are ?
A. fiat, commodity and deposit money
B. Open-market operations reserve requirements and the refinancing rate
C. The money supply, government purchases and taxation
D. Government expenditures taxation and reserve requirements
E. Coin, currency and demand deposits
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
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