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1) A reduction in interest rates, causes an increases in the monetary base that results in an _________ in the availability of consumer credit and a ________ in the cost of consumer credit? a. reduction, increase b. reduction, reduction c. increase, reduction d. increase , increase
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2) Central banks prefer to fix the ____ and accept the resulting _____? a. demand for money, interest rate b. interest rate equilibrium money supply c. demand for money equilibrium money supply d. interest rate, demand for money
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3) If the central bank buys financial securities in the open market to increase the monetary base, this is and example of ? a. lender of less resort b. financial intermediation c. Open Market operations d. Financial regulation
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4) M4 is a __________ measure of money and includes deposits at both __________ and _________? a. narrow, banks, building societies b. wide, banks insurance companies c. Narrow, banks insurance companies d. Wide, banks building societies
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5) When interest rate rise, other things equal, we can expect the quantity of real money holding to ? a. fall b. increase c. not change d. None of these
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6) If the keep some money available in case I see a bargain this is an example of ? a. asset demand for money b. transactions demand for money c. token demand for money d. precautionary demand for money
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7) If banks and the private sector decide to hold less cash the money multiplier will be ? a. Unchanged b. Larger c. Smaller d. Unstable
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8) Banks create money by ? a. printing it b. issuing debit cards c. accepting cheques d. lending out part of their deposits
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9) Money has 3 main function they are __________ and __________? a. IOU , inflation hedge store of value b. Medium of exchange inflation hedge store of value c. Medium of exchange unit of account IOU d. Medium of exchange unit of account store of value e. Medium of exchange unit of account store of value
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10) Each point on the LM curve represents the equilibrium point in the ? a. money market for the given level of the money supply b. money market for different combinations of interest rates and output c. goods market for the given level of government spending d. goods market for the given interest rate
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