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Could somebody please help me solve these MCQs ?
With clear reasoning.
Help appreciated.
In which circumstance will an increase in the public sector deficit not lead to an increase in the
money supply, other things being equal?
A The deficit is financed by an increase in government borrowing from private individuals.
B The rate of interest is held constant.
C There is large-scale unemployment.
D Commercial bank lending to the private sector is held constant.
An aggregate demand curve slopes downwards from left to right. One reason for this is that a
reduction in the average price level will lead to
A a reduction in the real value of money balances.
B a reduction in interest rates.
C a decline in the country’s international competitiveness.
D the expectation of further price falls.
An economy is operating initially at its natural rate of unemployment.
According to monetarist theory, compared to the initial position, what will be the effect on
unemployment in the short run and in the long run of an unanticipated increase in the money
supply?
short run long run
A no change no change
B no change reduction
C reduction no change
D reduction reduction
With clear reasoning.
Help appreciated.
In which circumstance will an increase in the public sector deficit not lead to an increase in the
money supply, other things being equal?
A The deficit is financed by an increase in government borrowing from private individuals.
B The rate of interest is held constant.
C There is large-scale unemployment.
D Commercial bank lending to the private sector is held constant.
An aggregate demand curve slopes downwards from left to right. One reason for this is that a
reduction in the average price level will lead to
A a reduction in the real value of money balances.
B a reduction in interest rates.
C a decline in the country’s international competitiveness.
D the expectation of further price falls.
An economy is operating initially at its natural rate of unemployment.
According to monetarist theory, compared to the initial position, what will be the effect on
unemployment in the short run and in the long run of an unanticipated increase in the money
supply?
short run long run
A no change no change
B no change reduction
C reduction no change
D reduction reduction