1.Assume that investment does not depend on the interest rate. A decrease in government spending will cause which of the following for this economy?

Select one:

a. An increase in output.

b. An increase in the interest rate.

c. A decrease in investment.

d. No change in investment.

e. An increase in investment.

2.If individuals do not hold currency, we know that:

Select one:

a. H=R^d.

b. The money multiplier is 1/.

c. c= 0.

d. M=D^d.

e. All of the above.

3.Consider the consumption function,C=c₀+c₁Y_D, we assume thatc₁is

Select one:

a. between zero and one.

b. negative.

c. different depending on the levels of disposable income.

d. larger thanc₀.

e. equal to one.

4.Which of the following is the definition for the real supply of money?

Select one:

a. The stock of money measured in terms of goods, not dollars.

b. The actual quantity of money, rather than the officially reported quantity.

c. The real value of currency in circulation only.

d. The ratio of real GDP to the nominal money supply.

e. The stock of money measured in terms of dollars.

5.Which of the following is aliabilityfor the centralbank?

Select one:

a. Current account deposits.

b. Savings accounts.

c. Currency.

d. Loans.

e. Bonds.