Review Chapter 35

Quiz
•
Business
•
University
•
Hard
Shereen Bacheer
Used 16+ times
FREE Resource
16 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
According to the liquidity preference theory, an increase in the overall price level of 10 percent
increases the equilibrium interest rate, which in turn decreases the quantity of goods and services demanded
decreases the equilibrium interest rate, which in turn increases the quantity of goods and services demanded
increases the quantity of money supplied by 10 percent, leaving the interest rate and the quantity of goods and services demanded unchanged
decreases the quantity of money demanded by 10 percent, leaving the interest rate and the quantity of goods and services demanded unchanged
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
On the graph that depicts the theory of liquidity preference,
the demand-for-money curve is vertical
the supply-of-money curve is vertical
the interest rate is measured along the horizontal axis
the price level is measured along the vertical axis
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
According to liquidity preference theory, the opportunity cost of holding money is
the interest rate on bonds
the inflation rate
the cost of converting bonds to a medium of exchange
the difference between the inflation rate and the interest rate on bonds
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Refer to Figure 34-2. As we move from one point to another along the money-demand curve MD1,
the price level is held fixed at P1
the interest rate is held fixed at r1
the money supply is changing so as to keep the money market in equilibrium
the expected inflation rate is changing so as to keep the real interest rate constant
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Fiscal policy refers to the idea that aggregate demand is affected by changes in
the money supply
government spending and taxes
trade policy
All of the above are correct
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The marginal propensity to consume (MPC) is defined as the fraction of
extra income that a household consumes rather than saves
extra income that a household either consumes or saves
total income that a household consumes rather than saves
total income that a household either consumes or saves
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If the MPC = 3/5, then the government purchases multiplier is
5/3
5/2
5
15
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