Topic 5 - Monetary Policy and Interest

Topic 5 - Monetary Policy and Interest - BANK 1005...

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BANK 1005 Derivatives and Securities Markets P a g e | 1 TOPIC 5 – MONETARY POLICY AND INTEREST RATES MULTIPLE CHOICE QUESTIONS 1. Which of the following statements about inflation is or are true: A) It is the rate at which the general level of prices is increasing. B) Inflation rates are high when the economy is considered to be "overheated". C) Inflation is unrelated to unemployment rates. D) A and B. 2. Fiscal policy is difficult to implement quickly because A) It requires political negotiations B) Much of government spending is nondiscretionary and cannot be changed C) Increases in tax rates affect consumer spending gradually D) A and B. 3. Assume the government was to decide to decrease the budget deficit. This action will most likely cause which of the following to decrease: A) Interest rates B) Government borrowing C) Unemployment D) Both A and B 4. GDP refers to the: A) Amount of personal disposable income in the economy. B) Total production of goods and services in the economy C) Total manufacturing output in the economy. D) Difference between government spending and government revenues. 5.
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Topic 5 - Monetary Policy and Interest - BANK 1005...

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