1) The demand for money curve shows that there is an inverse relationship between the quantity of money demanded and the

A)price level.

B)gross domestic product (GDP).

C)interest rate.

D)quantity of money supplied.

2) Which of the following is true of a year experiencing economic growth?

A)Its economic growth rate is positive.

B)Its nominal GDP would be more than that of the previous year.

C)Its real GDP would be more than that of the base year.

D)All of the above

3) If the required reserve ratio decreases, the

A)money mulitiplier decreases.

B)a money multiplier increases.

C)money multiplier stays the same.

D)amount of excess reserves the bank has decrease.

4) The output of Taiwan-owned firms located in India is reflected in

A)India's GDP.

B)Taiwan's GNP.

C)India's GNP and Taiwan's GDP.

D)Taiwan's GNP and India's GDP.

5) A bank creates money when it

A)Holds back excess reserves because of an increase in the required reserve ratio.

B)makes a loan from its excess reserves.

C)has a loan paid off, which creates excess reserves for the bank.

D) gets new checkable deposits which the depositor formerly held as cash.

6) Double counting in the computation of GDP refers to

A)counting the total value of a final good in addition to the value of the intermediate goods used to make it.

B)reflecting the output produced in the domestic economy by resources owned by the citizens in both the country's GDP and GNP statistics.

C)calculating GDP twice using the income and expenditure methods.

D)adding the value of exports to GDP and subtracting the value of imports.

7) A Commercial bank's "required reserves" are

A) equal to its loans

B)equal to its checkable deposits.

C)equal to its transaction deposits.

D)held as deposits with the Central Bank.

8) Real GDP is measured in

A)base-year prices

B)current-year prices.

C)ten-year average prices.

D)previous-year prices.

9) Which of the following is NOT a component of the M1 money supply?

A)large-denomination (more than $100) bills

B)outstanding balances on credit cards

C)interest-earning checking deposits

D)demand deposits

10) The lowest attainable unemployment rate in an economy is called the ____________ rate of unemployment.

A)necessary

B)nominal

C)normal

D)natural