A. is determined in the goods market and influences the level of planned investment and thus the money market
B. is determined in the money market and influences the level of planned investment and thus the goods market
C. is determined in the goods market and has no influences on the money market
D. is determined in the money market and has no influence on the goods market
Money, Interest Rates And Output
For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?
A. decrease the money supply
B. increase the money supply
C. increase the demand for money
D. decrease the demand for money
According to the simple Keynesian view the aggregate supply curve is ?
A. downward sloping over all levels of output
B. upward sloping over all levels of output
C. horizontal until it reaches full capacity and then becomes vertical
D. vertical until it reaches full capacity and then becomes horizontal
If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?
A. Suffer even more
B. not be reduced as much as it would have been
C. be replaced by foreign investment
D. be replaced by consumer spending
If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?
A. be reduced
B. not be affected
C. fall to zero
D. be increased
The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ?
A. aggregate supply curve
B. LM curve
C. aggregate demand curve
D. IS curve
When the money supply increase ?
A. the economy moves up the LM curve
B. The LM curves shifts to the left
C. The economy moves down the LM curve
D. The LM curve shift to the right
Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be ………. and the LM curve must be ……….?
A. flat; steep
B. flat; flat
C. steep; flat
D. steep; steep
The primary function of bank is to ?
A. Control the money supply
B. Provide notes and coins for trade
C. Make a profit
D. Provide a cheque clearing system
The money supply is ?
A. State Bank of Pakistan Issue Department
B. Money + bank cards + credit cards
C. Cheques + money + bank cards + credit cards
D. Currency in circulation plus bank deposits