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EC1001
16. If the money multiplier equals 10, then the reserve ratio must be equal to:
a) 1 %
b) 2 %
c) 5 %
d) 10 %
17. If the Bank of Englad buys gilts from the public, this is referred to as:
a) A lowering of the repo.
b) An open market operation.
c) Contractionary monetary policy.
d) Expansionary fiscal policy.
18. According to the classical dichotomy:
a) Changes in nominal variables have no influence on real variables.
b) Changes in real variables immediately lead to changes in nominal variables.
c) Changes in real variables lead to changes nominal variables in the long run.
d) Changes in nominal variables lead to changes real variables in the long run.
19. According to misperceptions theory:
a) The aggregate demand curve will be downward sloping.
b) The aggregate demand curve will be upward sloping.
c) The aggregate supply curve will be downward sloping.
d) The aggregate supply curve will be upward sloping.
20. Which of the following is not included in the M1 money supply measure:
a) Currency in circulation.
b) Credit card debt.
c) Demand deposits.
d) Checkable deposits.
21. When a government has a very large budget deficit this will normally be accompanied by the
country having:
a) A low level of output per capita
b) A trade deficit.
c) A low rate of inflation.
d) A high rate of unemployment.
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