Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action ?

A. Rs 10,00
B. Rs 1,000
C. Rs 9,000
D. Rs 0

Which of the following policy actions by a central bank is likely to increase the money supply ?

A. Increasing the refinancing rate
B. All of these will increase the money supply
C. Buying government bonds in open market operations
D. Increasing reserve requirements

Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?

A. Rs 4,000
B. Rs 5,000
C. Rs 1,000
D. Rs 0

The monetary base is ________ and _________?

A. Bank deposits, building society deposits
B. Currency in circulation, banks cash reserves
C. Retail sight deposits building society deposits
D. Retail deposits, wholesale deposits

Equilibrium in the Money market will change if there is ?

A. A change in the real money supply
B. A change in real income
C. A change in competition in the banking industry
D. Any of the above

One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?

A. Rise; increase, increase
B. Rise, falls, increase
C. Rise, increase, falls
D. Rise, falls, falls

A fall in investment demand can result from ?

A. Higher interest rates
B. Lower expected future profits
C. More expensive capital goods
D. All of the above

Which of the following is not a function of money ?

A. Hedge against inflation
B. Medium of exchange
C. Unit of account
D. Store of value

Commodity money ?

A. Has no intrinsic value
B. Has intrinsic value
C. Is used exclusively in the economies of western europe and north america
D. Is used as reserves to back fiat money

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