Question No: 26 ( Marks: 1 ) - Please choose one
Aggregate demand curve slopes down because of many reasons which of the following is NOT the reason of its downward slope?
► Higher inflation increases real money balances
► Higher inflation induces policymakers to raise the real interest rate
► Rising inflation also reduces wealth
► Rising inflation lowers consumption
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is NOT an example of financial institutions?
► Bank
► Securities firm
► Stock exchange
► Insurance company
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following has created an opportunity for small investors to participate in economic activity?
► Mutual funds
► Small corporations
► Stock brokers
► Small investors cannot take part in economic activity
Question No: 29 ( Marks: 1 ) - Please choose one
Managing _______ is a major concern for today's banks.
► Trading risk
► Interest rate risk
► Systematic risk
► Other risk
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following is a combination of auto insurance?
► Life insurance and property insurance
► Life insurance and causality insurance
► Property insurance and casualty insurance
► Life insurance and saving account
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following are the primary uses of funds of depositor institution?
► Cash, loans, securities http://vustudents.ning.com
► Corporate bonds, government bonds, stocks
► Commercial paper, bonds, mortgages
► Mortgages, consumer loans, business loans
Question No: 32 ( Marks: 1 ) - Please choose one
Why central bank occupies a privileged position in a country?
► It controls the availability of money
► It controls credit in a country's economy
► All of the given options
► It has monopoly on the issuance of currency
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following are goals of the Central Bank?
► Price stability
► Stable output growth
► Stable financial system
► All of the above
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a function of the Central Bank?
► Conduct economic research
► Regulate brokers and insurance companies
► Evaluate bank mergers
► These are all functions of the fed.
Question No: 35 ( Marks: 1 ) - Please choose one
Which of the following can expand the size of the balance sheet of a central bank and the monetary base? http://vustudents.ning.com
► Open market operations
► Discounted loans
► Foreign exchange intervention
► All of the given options
Question No: 36 ( Marks: 1 ) - Please choose one
Difference between _______ and required reserve is the excess reserves.
► Deposits
► Securities
► Currency
► Reserve
Question No: 37 ( Marks: 1 ) - Please choose one
The withdrawal reduces the banking system's____________, which is a decrease in its assets, and if the funds come from a checking account, there is a matching decrease in liabilities.
► Vault cash
► Securities
► Reserves
► Currency
Question No: 38 ( Marks: 1 ) - Please choose one
Required reserve ratio and quantity of money have __________.
► Direct relation
► Inverse relation
► No relation
► Incomplete information
Question No: 39 ( Marks: 1 ) - Please choose one
The quantity of money people hold for transaction purposes does NOT depends upon:
► Nominal income
► Cost of holding money
► Availability of substitutes
► Real income
Question No: 40 ( Marks: 1 ) - Please choose one
Higher the level of uncertainty about the future, the higher the demand for money and the _________ the velocity of money.
► Incomplete information
► Lower
► Higher
► Stable
Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following has a great influence on the aggregate demand?
► Real interest rate
► Nominal interest rate
► Effective interest rate
► None of the given options
Question No: 42 ( Marks: 1 ) - Please choose one
Which of the following is (are) the factor(s) of aggregate demand?
► Investment
► Govt. purchases
► All of the given options
► Consumption
Question No: 43 ( Marks: 1 ) - Please choose one
When current inflation raises Monetary policymakers raise the real interest rate, moving _________along the monetary policy reaction curve
► Right
► Left
► Upward
► Downward
Question No: 44 ( Marks: 1 ) - Please choose one
Which of the following is shown by the aggregate demand curve?
► How sensitive current output is to given change in current inflation
► Current output is not sensitive to given change in current inflation
► Current output and current inflation both move in the same direction
► None of the given options
Question No: 45 ( Marks: 1 ) - Please choose one
Which of the following reason(s) can shift the short run aggregate supply curve?
► Deviation of current output from potential output
► Changes in external factors driving production costs
► When current output is equal to potential out put
► Deviation of current output from potential output and Changes in external factors driving production costs
Question No: 46 ( Marks: 1 ) - Please choose one
Which of the following is determined by the intersection of the aggregate demand curve with the short-run aggregate supply curve?
► Short-run equilibrium
► Long-run equilibrium
► Both short-run and long-run equilibrium
► None of the given options
Question No: 47 ( Marks: 1 ) - Please choose one
When current output exceeds potential, the resulting expansionary gap exerts upward pressure on inflation, shifting the short-run aggregate supply curve _____________.
► Right
► Left
► Upward
► Downward
Question No: 48 ( Marks: 1 ) - Please choose one
Policymakers can shift the aggregate demand curve by shifting their monetary policy reaction curve, but which of the following cannot be shifted by them?
► Short-run aggregate supply curve
► Long-run aggregate demand curve
► Short-run aggregate demand curve
► None of the given options
Question No: 49 ( Marks: 3 )
What is the effect of an increase in potential output on inflation and output?
Question No: 50 ( Marks: 3 )
Give an account of different components of aggregate demand?
Question No: 51 ( Marks: 5 )
Give brief explanation of the following.
a)What is Target funds rate?
b) How it is controlled?
c)What will be the impact of target federal rate on economy?
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