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 ?

Related Mcqs:

1. Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?

   A. decrease government spending Which the shifts the aggregate demand curve to the left
   B. decrease taxes, which shifts the aggregate demand curve to the right
   C. decrease taxes, which shifts the aggregate demand curve to the left
   D. decrease government spending which shifts the aggregate demand curve to the right

2. If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

   A. as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall
   B. as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise
   C. as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
   D. as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise

3. 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

4. Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?

   A. assets
   B. deposits
   C. loans
   D. government bonds

5. Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action ?

   A. Rs 10,00
   B. Rs 1,000
   C. Rs 9,000
   D. Rs 0

6. The Bank of England and the Federal Reserve ?

   A. are central banks
   B. are branches of commercial banks
   C. use fiscal policy to influence GDP
   D. loan money to most of LDC commercial banks

7. Sana values a pair of blue jeans at Rs400. If the price is Rs350 Sana buys the jeans and generates consumer surplus of Rs50 Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to Rs450 Now sana chooses not to buy a pair of?

   A. the deadweight has demonstrated
   B. the ability-to-pay principle
   C. the benefits principle
   D. horizontal equity
   E. The administrative burden of a tax.

8. Bance Solida has, in the past, always operated with a reserve ratio of 25 percent. It has now been taken over by Gung-Ho Bank Which operates with a reserve ration of 12½ percent, Assuming that Banca Solida adopts the business practices of its new owner, What will be the effect on money supply in the country in which Banca Solida operates ?

   A. Money supply will increase because Banca Solida will increase its loans
   B. The effect on money supply cannot be determined from the information given
   C. Money supply will decrease because the loans will have to be repaid
   D. Money supply will be unchanged because the central bank has made no policy changes

9. Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the long run ?

   A. Output falls; prices are unchanged from the initial value
   B. Price fall; output is unchanged from its initial value
   C. Output and the price level are unchanged from their initial values
   D. Prices rise; output is unchanged from its initial value

10. Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?

    A. Price fall; output rises
    B. Price fall; output falls
    C. Price rise; output fall
    D. Price rise; output rise