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1.13 The principle of the multiplier states that: (4 marks) a) any increase in aggregate spending that causes the aggregate demand curve to shift will
1.13 The principle of the multiplier states that: (4 marks) a) any increase in aggregate spending that causes the aggregate demand curve to shift will result in a larger increase in national income. b) in the long run, the aggregate demand curve becomes relatively flat as the economy approaches full employment. C) any increase in national income will result in a larger increase in aggregate spending. d) for any given increase in income, there will be a less than proportional increase in consumer spending. 1.14 Read the following quote and answer questions 1.14 -1.16 China's central bank Monday conducted a total of 10 billion yuan (about $1.4 billion) of reverse repos to maintain liquidity in the banking system. The interest rate for the seven-day reverse repos was set at 2 percent, according to the People's Bank of China. The move aims to keep stable liquidity in the banking system, the central bank said. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future." The area of responsibility that China's central bank is undertaking with the above decision is that of: (4 marks) a) Fiscal policy. b) Service to the government. c) Provision of economic and statistical services. d) Maintaining financial stability. 1.15 The measure of money that will not be immediately affected by the above action by China's central bank is: (4 marks) M1 b) M2 c) M3 d) Quasi money 1.16 The policy instrument that China's central bank is making use of here is that of: (4 marks) a) Fiscal policy b) Open market policy. c) Public debt management. d) Intervention in foreign exchange markets. 1.17 Read the following and answer questions 1.17 - 1.18. 'Oregon marked a milestone last month by returning to pre-pandemic employment levels, rebounding much faster than during prior recessions. But some sectors, notably hospitality, haven't fully recovered. That's largely because of an ongoing worker shortage that has constrained businesses' ability to staff up." The unemployment being addressed in the above quote is... (4 marks) a) Cyclical unemployment b) Seasonal unemployment c) Hidden unemployment Frictional unemployment
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