Economics Readings Site By Colin Ong

This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

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MCQ3 (d, b, b)

clipped from www.bized.co.uk

Money: Monetary policy




Q1. An example of an expansionary monetary policy is

(Select one answer)




(a) * an increase in the required reserve ratio.

(b) * an increase in the discount rate.

(c) * a reduction in the taxes banks pay on their profits.

(d) * the Central bank buying government securities in the open market.








Source: Pearson logo




Q2. By 'Controlling the monetary base' economists mean

(Select one answer)




(a) * controlling the money multiplier

(b) * making banks keep a certain % of their assets as M0

(c) * not allowing commercial banks to issue notes and coins

(d) * restricting the amount of cash in circulation
Q4. Under New Classical macroeconomics monetary policy


(Select one answer)





(a) * affects the level of equilibrium output

(b) * affects the composition of equilibrium output

(c) * affects both the level and composition of equilibrium output

(d) * none of the above
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