1. defensive open market operations happen when central bank wants to change policy

a.True

b.false

2. under a reverse repurchase, the BSP act6 as the seller of government securities, thus, the bank's payment reduces its reserve account resulting to:

a. expansion in the system's money demand

b. expansion in the system's money supply

c. contraction in the system's money supply

d. contraction in the system's money demand

3.which of the following statements about a country's budget is not true?

a. A budget surplus is always beneficial for investor in the financial markets

b. Budget deficit occurs when the government sp[ending exceeds ther taxes collected

c. A country's outstanding debt may decrease during a budget surplus

d. None of the above

4.In an expansionary monetary policy, when domestic real interest rates fall, domestic assets become less attractive relative to the assets denominated in foreign currencies and will lead to lower value of the domestic currency (or the domestic currency depreciates).

a.True

b.false

5.what is the impact if a central bank does not change its monetary policy at full employment?

a.Output stays at full employment, no change in price

b.Output is at full employment, price rises

c.Output rises above full employment temporarily, prices rise relatively quickly

d.Output falls below full employment temporarily, price falls quickly.

6.In general, the impact of contractionary policy during high GDP growth:

a. interest rate rises

b. Output declines

c. Unemployment rises

d. All of the above