Macroeconomics Answers

When the economy is in a liquidity trap or deflation spiral … 1. expansionary monetary policy becomes ineffective to stimulate the level of output and income. 2. expansionary monetary policy becomes effective to stimulate the level of output and income. 3. contractionary monetary policy becomes ineffective to stimulate the level of output and income. 4. contractionary monetary policy becomes effective to stimulate the level of output and income.

1)    How the Phillips Curve is related to the model of Aggregate Demand and Aggregate Supply. Explain using appropriate diagrams.

When a country imports more than it exports, what is the value of the net exports?

Select one:

a. Negative

b. Zero

c. Positive

d. Need more information

Countries trade ______.

Select one:

a. to reduce unemployment rate

b. to help each other

c. to specialize and reap the benefits from specialization, such as economies of scale

d. None of the options are correct

One of the following cannot be considered as source of demand for foreign currency.

Select one:

a. None of the options is correct

b. Exports

c. Demand to invest outside the domestic territory

d. Imports

Equilibrium exchange rate is determined ______.

Select one:

a. when demand for local currency meets the supply of local currency

b. when demand for foreign currency meets the supply for local currency

c. when demand for foreign currency meets the supply of foreign currency

d. when demand for local currency meets supply for foreign currency

World production will be greater when there is-------.

Select one:

a. self-sufficiency and specialisation

b. trade and specialisation

c. trade and non-specialised production

d. non-specialisation and self-sufficiency

What is 'Repo rate'?

Select one:

a. The rate at which commercial banks lend money to customers

b. none of the given options

c. The rate at which commercial banks borrow money from Reserve Bank

d. The rate at which commercial banks lend money to RESERVE BANK

What is the Cash Reserve Ratio (CRR)?

Select one:

a. none of the given options

b. the fraction of the deposits that commercial banks must keep with RESERVE BANK

c. the fraction of the deposits that RESERVE BANK must keep with commercial banks

d. the fraction of the deposits that commercial banks lend to the customers