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1 | |
The monetary base is ___________ and ________________ |
|
| | A) | bank deposits, building society deposits |
| | B) | currency in circulation, banks' cash reserves |
| | C) | retail sight deposits, building society deposits |
| | D) | retail deposits, wholesale deposits |
|
2 | |
If the central bank buys financial securities in the open market to increase the monetary base, this is an example of ____________ |
|
| | A) | lender of last resort |
| | B) | financial intermediation |
| | C) | open market operations |
| | D) | financial regulation |
|
3 | |
If there is excess demand in the money market there must be a corresponding ___________ in the bond market |
|
| | A) | excess supply |
| | B) | excess demand |
| | C) | elastic supply |
| | D) | inelastic supply |
|
4 | |
Equilibrium in the money market will change if there is |
|
| | A) | a change in the real money supply |
| | B) | a change in real income |
| | C) | a change in competition in the banking industry |
| | D) | any of the above |
|
5 | |
Central banks prefer to fix the __________and accept the resulting _____________ |
|
| | A) | demand for money, interest rate |
| | B) | interest rate, equilibrium money supply |
| | C) | demand for money, equilibrium money supply |
| | D) | interest rate, demand for money |
|
6 | |
One of the transmission mechanisms of monetary policy is through consumer demand. When interest rates ___________ household wealth ___________ and consumption _________ |
|
| | A) | rise, increases, increases |
| | B) | rise, falls, increases |
| | C) | rise, increases, falls |
| | D) | rise, falls, falls |
|
7 | |
Lower interest rates make households ____________ by ___________ the price of bonds and _________ share prices |
|
| | A) | poorer, lowering, lowering |
| | B) | poorer, increasing, lowering |
| | C) | wealthier, increasing, increasing |
| | D) | wealthier, lowering, lowering |
|
8 | |
A reduction in interest rates causes an increase 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 |
|
9 | |
A fall in investment demand can result from |
|
| | A) | higher interest rates |
| | B) | lower expected future profits |
| | C) | more expensive capital goods |
| | D) | all of the above |
|
10 | |
The permanent income hypothesis would suggest that a person winning a modest lottery prize might be interpreted as experiencing a change in their permanent income |
|
| | A) | TRUE |
| | B) | FALSE |
|
11 | |
There is a market for money situated in the City of London |
|
| | A) | TRUE |
| | B) | FALSE |
|
12 | |
The money supply is controlled by using open market operations to determine the money multiplier and by using reserve requirements and the discount rate to determine the monetary base |
|
| | A) | TRUE |
| | B) | FALSE |
2002 A McGraw-Hill Online Learning Centre