A. increase the minimum reserve asset ratio.
B. buy government securities on the open market
C. raise interest rates
D. sell government securities on the open market
Related Mcqs:
- If the State Bank of Pakistan wished to pursue a tight monetary policy it would ?
A. reduce the minimum reserve asset ratio.
B. buy government securities on the open market
C. lower interest rates
D. sell government securities on the open market - If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?
A. an increase in the level of output
B. a decrease in the unemployment rate
C. an increase in the rate of inflation
D. All of these answers - The chain of events that results from an expansionary monetary policy is ?
A. aggregate output increases the demand for money increase the interest rate increase planned investment
B. money supply increases the interest rate decrease planned investment increases aggregate output increases and money demand increase
C. money supply increases the interest rate increase planned investment increases aggregate output increases and money demand increases
D. money demand increases the interest rate decreases planned investment increases aggregate output increases and money demand increases - An example of an expansionary monetary policy is ?
A. a reduction in the taxes banks pay on their profits.
B. an increase in the required reserve ratio
C. an increase in the discount rate
D. the Central bank buying government securities in the open market - Expansionary monetary policy ?
A. tends to lead to an appreciation of a nation’s currency
B. tends to lead to a depreciation of a nation’s currency
C. usually has no effect on a currency’s exchange value
D. tends to lead to a depreciation of the currencies of other nations - According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?
A. The economy will experience an increase in inflation
B. The economy will experience a decrease in inflation
C. Inflation will be unaffected if price expectations are unchanging
D. None of these answers - Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?
A. Rs 4,000
B. Rs 5,000
C. Rs 1,000
D. Rs 0 - Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?
A. Shift aggregate demand to the left
B. Shift short run aggregate supply to the left
C. shift aggregate demand to the right
D. shift short-run aggregate supply to the right - Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?
A. exceeds
B. fall below
C. fluctuate around
D. remain equal to - 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
