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MCQ3 (d, b, b)

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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.

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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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