1.The Reserve Bank of Australia uses open market operations:

Select one:

a.usually every day.

b.once a month when the Reserve Bank Board meets to discuss monetary policy.

c.only when it wants to increase or decrease the cash rate.

d.only when it is conducting monetary policy.

2.Investment spending ________ during a recession and ________ during an expansion.

Select one:

a.declines; increases

b.increases; declines

c.increases; increases

d.declines; declines

3.If some people who receive bank loans hold part of the amount as currency instead of depositing the full amount, the deposit multiplier to be ________ it would have been if all loans are fully deposited in banks.

Select one:

a.greater than

b.the same as

c.either greater than or smaller than

d.smaller than

4.Because money serves as a medium of exchange, an increase in real GDP:

Select one:

a.increases the buying and selling of goods and services and so increases the demand for money.

b.increases the buying and selling of goods and services and so decreases the demand for money.

c.decreases the buying and selling of goods and services and so increases the demand for money.

d.decreases the buying and selling of goods and services and so decreases the demand for money.

5.Which of the following is an assumption of the basis (static) aggregate demand and aggregate supply model?

Select one:

a.Potential GDP increases continuously.

b.The economy does not experience continuing inflation.

c.The economy does not experience long-run growth.

d.The economy's aggregate demand curve shifts to the right in most periods.

6.Refer to Figure 9.2 for the following questions.

Figure 9.2 Real aggregate expenditure, AE Y = AE AE N AE, L K 450 0 Real GDP, YReal aggregate expenditure, AE Y = AE AE, K 450 0 Real GDP, Y