The outcome of expansionary monetary policy is decreasing aggregate demand by lowering the interest rate and increasing investment opportunities. *

1 point

True

False

In public and open economy, when the GDP of the aggregate expenditure model describes the equilibrium. Which of the following is true *

1 point

injections into the income-expenditures stream equal leakages from the income stream

S +M+T = Ig+X+G

At the equilibrium GDP, the sum of the leakages equals the sum of injections

All statements are true

Both a and b

The slope of the aggregate demand curve is downward because of ...? *

1 point

Income effect

Real balance effect, interest rate effect

Change in determinants of AD curve

Substitution effect

The monetary policy does not focus on_______? *

1 point

Low taxes

Moderate long-term interest rate

Stable prices

Maximum employment

At any given level of income, an increase in consumption and decrease in saving is likely to lead to *

1 point

A fall in taxation revenue

An increase in exports

A decrease in import spending

Higher aggregate demand

The equilibrium GDP in aggregate expenditure model requires the full employment level GDP of an economy *

1 point

True

False

If there is an inflation in economy, and government want to control it with the collaboration of monetary policy of country, then Government will ______________, while SBP will _____________? *

1 point

Reduce the government spending, increase the money supply

Control government spending, reduce the money supply

Increase the government spending, reduce the money supply

Increase the government spending, increase the money supply

Demand-pull inflation is due to an increase in aggregate demand when *

1 point

Aggregate supply is unit elastic

Aggregate supply is perfectly elastic

Aggregate supply is relatively elastic

Aggregate supply is perfectly inelastic

When both AD and AS curve shifts toward the right side, then which of the following phenomenon can be experienced in an economy. *

1 point

All situations can be observed

Full employment

Economic growth

There is no relation of full employment, and mild inflation

Mild inflation

The Aggregate supply curve in the short-run where the price of output and GDP directly relates; will be ......... before the full employment level of GDP and ......... after the full employment level of GDP. *

1 point

Before and after it will have same slope

All statements are false

Steeper, flat

Flat, steeper

An expansionary fiscal policy to handle the___________ can use _______ as a tool? *

1 point

Inflation, A decrease in corporate tax

Recession, Low interest rate

Recession, An increase in government spending

Inflation, facilitate the lending by commercial banks

The shift in the aggregate supply curve to the left with the relative elastic aggregate demand curve describes the *

1 point

Decline in supply of final goods produced in an economy

Cost-push inflation

Demand-pull inflation

The slope of the aggregate supply curve is upward because of....? *

1 point

High per unit cost of production after the full employment level of GDP

Substitution effect

Output market fluctuations

Interest rate effect

When the AS curve will be parallel to the horizontal axis, and movement along the curve describes: *

1 point

Variable price and variable real domestic output level

Fixed price level and fixed Real domestic output (GDP) level

Fixed price level and variable real domestic output level

Variable price level and fixed real domestic output level

Aggregate demand (AD) will increase which shifts the aggregate demand curve to the right. This will occur when *

1 point

Import falls

Consumption falls

Investment falls

Export falls

A closed economy describes the aggregate expenditure will be the sum of *

1 point

consumer expenditure, planned investment spending, and government spending.

consumer expenditure, planned investment spending, government spending, and net exports.

consumer expenditure, actual investment spending, and government spending.

consumer expenditure, actual investment spending, government spending, and net exports.

To resolve the problem of unemployment and recession, which action is preferable----? *

1 point

Increasing the reserve ratio

Buying bonds

Reduce the money supply

Increasing the discount rate

Investment depends on ........? *

1 point

Expected rate of return

Real domestic product (GDP)

Nominal interest rate

Both Expected rate of return and nominal interest rate

An increase in planned investment will cause aggregate expenditure to *

1 point

increase by an amount greater than the change in investment spending.

increase by an amount equal to the change in investment spending.

increase by an amount less than the change in investment spending.

decrease by an amount less than the change in investment spending.

Which of the following shift the aggregate demand curve to the right *

1 point

Increase import spending

Increased investment

Increased savings

Increase tax revenue

When transaction or asset demand for money increases, it will lead to *

1 point

Lower the interest rate and lower the quantity of money

Higher the interest rate but no change in quantity of money

Lower the interest rate but no change in quantity of money

Higher the interest rate and lower the quantity of money

An increase in nominal GDP means that the public wants to hold a larger amount of money for transactions, and that extra demand will shift the total money demand curve to the right. *

1 point

False

True

The SBP try to _______ the reserve ratio and, also ________ the discount rate to facilitate the commercial banks directly? *

1 point

Reduce and , increase

Increase and, increase

Reduce and, reduce

Increase and , reduce

The monetary policy describes what the SBP does to influence the amount of ------ and ------ in Pakistan's economy? *

1 point

Money and credit

Interest and debt

Taxes and revenue

Currency and gold reserves

Inflationary expenditure gap describes the situation of *

1 point

Cost-push inflation

Both over spending and demand-pull inflation

Frictional unemployment

Demand-pull inflation

Over spending

Both Cost push inflation and overspending

Keynes assumed the fixed price level in his aggregate expenditure model because of *

1 point

(b) his primary focus was on output and employment.

(a) inflation was not a serious problem during the Great Depression.

both (a) and (c)

both (a) and (b)

(c)his primary focus was on interest rates and investment spending.

The aggregate expenditure model assumes flexible prices *

1 point

True

False

A reduction in the money supply is likely to: *

1 point

Interest rate fall, and the amounts of money demanded both for transactions and as an asset would increase.

Interest rate fall, the amount of money demanded for transactions would rise, and the amount of money demanded as an asset would decline.

Interest rate rise, and the amounts of money demanded both for transactions and as an asset would fall.

Interest rate rise, the amount of money demanded for transactions would be unchanged, and the amount of money demanded as an asset would decline.

Transaction demand of money and asset demand for money is different from each other because *

1 point

(a) Transaction demand of money does not depends on interest rate

(c) Transaction demand of money depends on nominal GDP

Both b and d

Both a and c

(b) Transaction demand of money depends on interest rate

(d) Transaction demand of money depends on real GDP

Which macroeconomic indicator is not analyzed by fiscal policy?? *

1 point

Total net revenue receipts

Debt policy of a commercial bank

Debt per capita

Fiscal deficit

A depression abroad will tend to __________ our exports, which in turn will_________ net exports, which in turn will __________ equilibrium real GDP. *

1 point

Reduce; reduce; reduce.

Reduce; increase; increase.

Increase; reduce; reduce.

Increase; increase; increase.

The consumer expenditure describes the spending by .......... according to the Keynesian model. *

1 point

Consumer on personal laptop

Businesses on laptop

All statements are true since laptop is consumer durable

Government on laptop

Increase in AD cause _________, and decrease in AD cause ________ *

1 point

Inflation, Recession/cyclical unemployment

Inflation, recession

Recession, cyclical unemployment

Cyclical unemployment, inflation

The real balance effect means "A higher income level increase the real value or purchasing power of the public's accumulated savings balances". *

1 point

True

False

Which of the following statement is true about the cost-push inflation *

1 point

it occurs due to the shift in short-run AS curve to left

all statements are true

only a and c is true

the real output also declines

it occurs, and recessionary GDP also appeared

The shift in the AD curve to right will describe the ..........when the AS curve is totally priced inelastic *

1 point

Decrease in price but no change in output

Increase in price but increase in output

Increase in price but no change in output

Decrease in price but decrease in output