Yougotit!

Let
'sfocusongett
ingyou25quest
ionsaboutmoneydemandandmoneysuppl
y.I
under
standyouneedtheanswerst
oo,soI
'
lli
ncl
udethoset
hist
ime.

*
*Mul
ti
pleChoi
ce(
chooset
hebestanswer
):
**

1.*
*Whichoft hef oll
owingisNOTaf uncti
onofmoney ?**
a)Medi um ofexchange
b)Storeofv alue
c)Unitofaccount
d)Measur eofi ncomei nequali
ty
2.*
*Thedemandf ormoneyt hatari
sesfrom theneedtomakeever
ydaytr
ansact
ionsiscal
l
ed:
**
a)Specul ativ edemandf ormoney
b)Precaut ionar ydemandf ormoney
c)Transact ionsdemandf ormoney
d)Assetdemandf ormoney
3.*
*Accordingt ot hel i
qui
dit
ypr ef
erencetheory
,anincr
easei
nthei
nter
estrat
ewill
:*
*
a)Increaset hequant it
yofmoneydemanded
b)Decr easet hequant i
tyofmoneydemanded
c)Hav enoef fectonthequant it
yofmoneydemanded
d)Decr easet hemoneysuppl y
4.*
*Whichoft hef oll
owingisthemostl i
quidasset?*
*
a)Real estat e
b)Savingsaccount
c)Cash
d)Gov ernmentbonds
5.*
*Theoppor tuni tycostofholdingmoneyi s:
**
a)Thepr icel evel
b)Thei nter estr ate
c)Theunempl oy mentrate
d)Thei nflationr at
e

*
*Tr
ueorFal
se:
**

6.**Ani ncreasei nthepricelev

el wil
lleadtoadecreaseinthedemandformoney.*
*(True/Fal
se)
7.**Themoneysuppl ycurveistypicall
ydrawnasav ert
icall
i
nebecauseiti
sdetermi
nedbyt he
centralbank.**( True/
False)
8.**Open mar ketoper ati
onsr efert othecent r
albank'sbuyi
ng and sel
l
ing ofgov er
nment
securiti
est oinf
luencet hemoneysuppl y.
**(Tr
ue/False)
9.**Ani ncreasei nthereserverequir
ementwi l
lincr
easethemoneysupply.
**(Tr
ue/Fal
se)
10.** Thev elocityofmoneymeasur eshow quicklymoneychangeshandsi ntheeconomy .*
*
(Tr
ue/ False)

*
*Mul
ti
pleChoi
ce(
cont
inued)
:**

11.**Whi
choft hef oll
owingwouldbeconsider
edpartofM1,thenar
rowestdef
ini
ti
onoft
he
moneysupply?**
a)Sav i
ngsdeposi ts
b)Traveler'
schecks
c)Moneymar ketmutualf
unds
d)Smal lti
medeposi ts
12.*
*TheFeder alReserveSystem (
Fed)i
ntheUni
tedSt
atesi
sanexampl
eofa:**
a)Commer cialbank
b)Cent r
albank
c)Investmentbank
d)Creditunion
13.**Whent hecent r
al bankwant stoi ncr
easethemoneysuppl
y,i
tcan:
**
a)Sellgov er nmentbonds
b)Increaset hedi scountrat e
c)Lowert her eser verequirement
d)Increaset axes
14.**Accor dingt othequant i
tyt heoryofmoney ,ar
api
dincr
easeinthemoneysuppl
ywi
l
llead
to:
**
a)Rapideconomi cgr owth
b)Infl
ation
c)Deflation
d)Loweri nterestr ates
15.**Thenomi nalinterestrateis:**
a)Thei nter estrateadj ustedf ortaxes.
b)Thei nter estrateadj ustedf orinfl
ati
on.
c)Thei nter estratest atedonal oanagreement.
d)Ther eal i
nterestr ateplust heinfl
ati
onrate.

*
*Tr
ueorFal
se(
cont
inued)
:**

16.* *Themoneymul ti
pli
ermeasur est hemaxi mum amountofmoneyt hatcanbecr eatedby
banksf rom agi venamountofr eserves.
**(True/False)
17.* *Adecr easei nconsumerconf idencecanl eadtoadecreaseinthedemandf ormoney .
**
(True/False)
18.**TheFeder alReser
vehasper fectcontr
ol overthemoneysupply
.**(Tr
ue/ Fal
se)
19.**Hy peri
nflati
onisasi t
uat
ionofext r
emelyhi ghandacceler
ati
nginfl
ati
on.**(True/Fal
se)
20.* *
Changesi nthemoneysuppl yhavenoef f
ectonr ealv
ari
abl
esinthel ongrun,accor di
ngto
theclassicaldichotomy.**(Tr
ue/False)

*
*Mul
ti
pleChoi
ce(
cont
inued)
:**

21.*
*Whichoft hef ollowingi sNOTat oolofmonet arypol
i
cyusedbycent
ralbanks?
**
a)Openmar ketoper ati
ons
b)Reserver equirement s
c)Discountr at
e
d)Fi
scal policy
22.*
*Therelati
onshi pbet weent hequanti
tyofmoneydemandedandt heinter
estrat
eis:
**
a)Positi
ve
b)Negat i
ve
c)Nonexistent
d)U-shaped
23.*
*Anincreasei nt hemoneysuppl ywi l
lleadtoa* *
a)Rightwardshi ftoft hemoneysuppl ycurve.
b)Leftwardshi ftofthemoneysuppl ycurve.
c)Mov ementupal ongt hemoneysuppl ycurv
e.
d)Mov ementdownal ongthemoneysuppl ycur v
e.

*
*Tr
ueorFal
se(
cont
inued)
:**

24.**Moneyi l
l
usionoccurswhenpeoplemakedeci si
onsbasedonr ealval
uesrathert
han
nominalval
ues.
**(Tr
ue/Fal
se)
25.*
*Theconceptof"shoe-
leat
hercost
s"i
sassoci
atedwit
ht heinconveni
enceofhav
ingtomake
morefrequentt
ri
pstothebankduri
ngperi
odsofhi
ghinfl
ati
on.**(True/
Fal
se)

-
--
*
*Answer
s:*
*
**Mult
ipl
eChoi ce:* *
1.**
d)Measur eofi ncomei nequalit
y**
2.**
c)Transact i
onsdemandf ormoney *
*
3.**
b)Decreaset hequant ityofmoneydemanded**
4.**
c)Cash* *
5.**
b)Thei nter estr ate**
11.**
b)Trav eler'schecks* *
12.**
b)Cent ral bank* *
13.**
c)Lowert her eserverequirement**
14.**
b)Infl
at i
on* *
15.**
c)Thei nt erestr atestatedonal oanagr
eement*
*
21.**
d)Fiscal pol icy**
22.**
b)Negat i
v e**
23.**
a)Right war dshi ftofthemoneysuppl ycur
ve.
**

**Tr
ueorFal se:**
6.**
Fal se**(I
ncreaseinpri
celevel
incr
easesthedemandformoney
)
7.**
Tr ue**
8.**
Tr ue**
9.**
Fal se**(I
twilldecr
easethemoneysupply)
10.**True**
16.**True**
17.**True**
18.**False**(Theyhavesigni
fi
cantbutnotperf
ectcont
rol
)
19.**True**
20.**True**
24.**False**(Moneyi l
l
usi
onisaboutnominalvs.r
ealval
ues)
25.**True**

Letmeknowi
fyouhav
eanymor
equest
ions!