1. The sovereign debt crisis was an additional challenge for the ECB, in addition to the frozen interbank market after the global financial crisis as started in 2007. Why did the sovereign debt crisis occur? What are the main problems as evolved in the pre-crisis period 1999 until 2007? In this context, which statement is wrong?
   1. Some Eurozone countries accumulated large current account deficits
   2. The German economy was too weak to compensate losses of debt countries due to the financial crisis
   3. Exceptional low interest rates in peripheral countries led to rapid growth in private debt
   4. Large differences in terms of wage growth between Eurozone countries
2. What was the main motivation by the ECB to purchase government bonds on the secondary market, as a response to the sovereign debt crisis in the Eurozone, 2007-2012? Which statement is correct?
   1. Increase the yield for German government bonds, so that Germany can help Greece to repay its debt
   2. Increasing the price and reducing the yield for government bonds of peripheral countries
   3. Increasing the supply of government bonds, reducing the price and increasing the yield to assist debt countries to meet their loan obligations
   4. Reducing the interest rate for interbank lending
3. Different economic models exist to explain money supply. What is the main difference between Fisher's quantity theory of money and Keynes's liquidity preference theory?
   1. The velocity of money is assumed to be flexible in the quantity theory of money
   2. Interest rates have no effect on money demand in the quantity theory of money
   3. Keynes's liquidity preference theory does not take aggregate output into account
   4. Price levels are only important in Keynes's liquidity preference theory
4. Suppose an artificial economy, where money supply (M) amounted to 100 Euro in the year 2010 and nominal GDP (P*Y) to 1000 Euro in the same year. Further suppose that money supply (M) increased annually by 20% while nominal GDP increased by only 10% per year. What is the velocity of money in the year 2012?
   1. 8.40
   2. 9.17
   3. 10.00
   4. 6.48
5. Which motive/s to hold money in Keynes's liquidity preference theory predicts the negative relationship between money demand and the level of interest rates?
   1. Precautionary motive
   2. Transaction motive
   3. Speculative motive
   4. Speculative motive in combination with the transaction motive
6. Based on Fisher's quantity theory of money, the classical economists came to the conclusion that a change in the quantity of money will lead to a proportional change in price levels. Why?
   1. Additional quantity of money will be used to buy more expensive products
   2. Velocity of money and aggregate output are assumed to be constant
   3. Amount of deposits increases, leading to higher interest rates and hence increasing price levels
   4. Additional quantity of money signals economic upswing leading to higher price levels
7. Who is usually not an active player in the money supply process?
   1. Commercial banks
   2. Central Bank
   3. Depositors
   4. Politicians
8. Why is velocity of money assumed to be constant in Fisher's quantity theory of money?
   1. Prices and wages are assumed to be fixed
   2. Money supply is not allowed to change
   3. Central banks control the velocity of money and hold it constant
   4. Institutional and technological features affecting individuals' payment behavior is assumed to be rather fixed
9. Consider the Keynesian cross analysis (to determine aggregate output) in a traditional model of a closed economy, in the absence of interest rate changes. A fully income tax financed increase in government spending:
   1. Has no effect on aggregate output in the end, because the increase in government consumption is automatically offset by a decrease in disposal income and hence private spending by the same amount
   2. Is likely to lead to higher aggregate output, as households are likely to reduce their expenditures (in response to additional taxes) by less than the tax increase
   3. Shifts the aggregate demand curve by more than the increase in government spending, due to the expenditure multiplier
   4. Decreases the sensitivity of aggregate demand with respect to changes in the aggregate output and so decreases the slope of the aggregate demand function