Ratio of money supply to interest rates C Both A and B D None of the above 4 If

# Ratio of money supply to interest rates c both a and

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Ratio of money supply to interest rates [C] Both A and B [D] None of the above 4. If \$1 = 140 yen; and R1 = \$10, we can conclude that [A] 1 yen = R280 [B] R1 = 1400 yen [C] R1 = 28 yen [D] none of the above 5. In the classical model, the economy always returns to the full employment level of output because [A] those who are unemployed lack the required skills [B] prices and money wages are perfectly flexible [C] workers suffer from money illusion [D] nominal money supply is endogenously determined. 6. What does M2 consist of? [A] Notes and coins. [B] Notes, coins, demand deposits, short-term deposits and medium-term deposits. [C] Notes and coins multiplied by two. [D] The quantity of notes and coins raised to the power of two. 7. The value of currency relative to a basket of currencies, is known as [A] Real exchange rate [B] Floating exchange rate [C] Effective exchange rate [D] Nominal exchange rate . 8. The Keynesian demand for money function can be expressed as [A] M D = f(i,Y). 11 Student number: __________________________
Economics 3B Semester Sick Test 1 – 14 October 2013 [B] M D /P = f(i). [C] MV = PY [D] M D /P = f(Y). 9. Who is the governor of the SARB? [A] Ben Bernanke [B] Trevor Manuel [C] Tito Mboweni [D] None of the above 10. A country with high level of money supply, ceteris paribus , is likely to have [A] higher interest rates than other countries [B] higher exchange rates than other countries [C] lower interest rates than other countries [D] None of the above 12 Student number: __________________________

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• Spring '11