)We would expect which of the following to occur when the central bank conducts an open market purchase of
bonds?
Select one:
a. A decrease in reserves.
b. A decrease in the money multiplier.
c. An increase in reserves.
d. An increase in the money multiplier.
e. A decrease in central bank money.
2)Which of the following will occur when the central bank pursues expansionary monetary policy?
Select one:
a. A rightward shift in the money demand curve and a rightward shift in the money supply curve.
b. A leftward shift in the money demand curve and a rightward shift in the money supply curve.
c. A rightward shift in the money demand curve and a leftward shift in the money supply curve.
d. A leftward shift in the money demand curve and a leftward shift in the money supply curve.
e. None of the above.
3)An increase in the interest rate will cause:
Select one:
a. a decrease in the supply of central bank money.
b. a decrease in the demand for reserves.
c. a decrease in the demand for currency.
d. both A and C.
e. both B and C.
4)An increase in the budget deficit increasing the level of investment is known as:
Select one:
a. the crowding in of investment.
b. the crowding out of investment.
c. the crowding out of budget deficit.
d. the crowding out of output.
e. the crowding in of budget deficit.
5)A decrease in the reserve deposit ratio, θ, will most likely have which of the following effects?
Select one:
a. A rightward shift in the IS curve.
b. A leftward shift in the IS curve.
c. An upward shift in the LM curve.
d. A downward shift in the LM curve.
e. A downward shift in the IS curve and an upward shift in the LM curve.