Multiple Choice Questions

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