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?

Related Mcqs:

1. 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

2. The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?

   A. Transactions motive
   B. precautionary motive
   C. profit motive
   D. speculation motive

3. Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

   A. currency arbitrage
   B. interest arbitrage
   C. short positions
   D. long positions

4. 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

5. Refer to Exhibit 4. Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 If the price of a belt is €10 and the price of a pair of socks is €5, the consumer will choose to buy the commodity bundle represented b point ?

   A. Z
   B. X
   C. Y
   D. the optimal point cannot be determined from this graph

6. Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should ?

   A. Increase government spending and decrease taxes
   B. decrease the money supply
   C. decrease government spending and increase taxes
   D. decrease interest rates

7. In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?

   A. decrease; depreciate
   B. decrease; appreciate
   C. increase; depreciate
   D. increase; appreciate

8. If an increase in a consumer’s income causes the consumer to increase his quantity demand of a good, then the good is ?

   A. a complementary good
   B. an inferior good
   C. a normal good
   D. a substitute good

9. Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?

   A. depreciation
   B. appreciation
   C. fall
   D. devaluation

10. A monetary union means ________, ________ and ________?

    A. permanently fixed capital movements floating exchange rates a fixed structure of interest rates
    B. permanently fixed exchange rates, free capital movements, a single interest rates
    C. a common currency a single central bank, common monetary policy
    D. a common currency floating exchange rates common monetary policy