MCQ Questions
Q.1.
The diagram above refers to a private closed economy. In this instance, the equilibrium GDP is:
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    $180 billion.
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    discount rate
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    Central Bank
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    countercyclical
Q.2.
When a Central Bank takes action to decrease the money supply and increase the interest rate, it is following:
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    following a loose monetary policy.
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    follow tight monetary policy.
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    countercyclical
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    a contractionary monetary policy.
Q.3.
If GDP is 1800 and the money supply is 300, then what is the velocity?
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    6
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    12
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    4
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    3
Q.4.
Which of the following is considered to be a relatively weak tool of monetary policy?
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    reserve requirements
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    altering the discount rate
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    a higher discount rate
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    open market operations
Q.5.
Which of the following events would cause interest rates to increase?
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    altering the discount rate
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    a higher discount rate
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    open market operations
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    reserve requirements
Q.6.
Which of the following institutions oversees the safety and stability of the U.S. banking system?
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    a higher discount rate
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    open market operations
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    Central Bank
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    The Federal Reserve
Q.7.
Central Bank policy requires Northern Bank to hold 10% of its deposits as reserves. Northern Bank policy prevents it from holding excess reserves. If the central bank purchases $30 million in bonds from Northern Bank what will be the result?
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    following an expansionary monetary policy.
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    Long and variable time lags
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    Northern's loan assets increase by $30 million
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    increase of $1 million in Pacific's loan assets
Q.8.
The central bank requires Southern to hold 10% of deposits as reserves. Southern Bank's policy prohibits it from holding excess reserves. If the central bank sells $25 million in bonds to Southern Bank which of the following will result?
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    borrow for the short term from the central bank.
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    countercyclical
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    the money supply in the economy decreases
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    following a loose monetary policy.
Q.9.
The quantitative easing policies adopted by the Federal Reserve are usually thought of as:
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    it negatively affects expansionary monetary policy.
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    temporary emergency measures.
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    altering the discount rate
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    a contractionary monetary policy.
Q.10.
If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:
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    the money supply increases and interest rates decrease.
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    following a loose monetary policy.
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    increase unemployment, but have little effect on inflation.
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    reduce unemployment, but have little effect on inflation.