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Macroeconomics
16. In the short run money is neutral and in the long run money is not neutral (a) True (b) False
17. A currency is said to Depreciate if there is a fall in its market price due to market forces. As a result, the currency will buy less, foreign exchange in the foreign exchange market. (a) True (b) False
18. ……. expectation assumes that people form their expectations of inflation based on the inflation they have recently observed (a) Adaptive (b) Observed (c) Rational (d) Projected
19. The Balance of payments of a country is constructed on the principle of …. (a) Public sector accounting (b) Single-entry book-keeping (c) Reconciliation (d) Double-entry book-keeping
20. The main instruments of fiscal policy are: (a) CBN tools and Government project (b) Government expenditure and Tax rate (c) Government Budgets and Revenue (d) Interest rate and Bank rate
17. A currency is said to Depreciate if there is a fall in its market price due to market forces. As a result, the currency will buy less, foreign exchange in the foreign exchange market. (a) True (b) False
18. ……. expectation assumes that people form their expectations of inflation based on the inflation they have recently observed (a) Adaptive (b) Observed (c) Rational (d) Projected
19. The Balance of payments of a country is constructed on the principle of …. (a) Public sector accounting (b) Single-entry book-keeping (c) Reconciliation (d) Double-entry book-keeping
20. The main instruments of fiscal policy are: (a) CBN tools and Government project (b) Government expenditure and Tax rate (c) Government Budgets and Revenue (d) Interest rate and Bank rate
Macroeconomics
11. Unsustained…… occurs when prices in the goods and services market are high relative to resource prices and other costs (a) economic recession (b) economic boom (c) inflation (d) deflation
12. Why do people hold M1? (a) To earn interest on their money (b) To carryout transactions (c) As a hedge against inflation (d) As a means to have enough liquid assets to buy bonds and other securities
13. Decreases in Aggregate Demand lead to …… and …. (a) boom, full employment (b) recession, cyclical unemployment (c) boom, cyclical unemployment (d) recession, full employment
14. The type of expectation that asserts that individuals make use of both present and past information to make future predictions is ……… expectation (a) rational (b) future (c) speculative (d) anticipated
15. …. in the exchange rate value of the nation’s currency will shift the Aggregate Demand curve inward. (a) Reduction (b) Shock (c) Increase (d) Boom
12. Why do people hold M1? (a) To earn interest on their money (b) To carryout transactions (c) As a hedge against inflation (d) As a means to have enough liquid assets to buy bonds and other securities
13. Decreases in Aggregate Demand lead to …… and …. (a) boom, full employment (b) recession, cyclical unemployment (c) boom, cyclical unemployment (d) recession, full employment
14. The type of expectation that asserts that individuals make use of both present and past information to make future predictions is ……… expectation (a) rational (b) future (c) speculative (d) anticipated
15. …. in the exchange rate value of the nation’s currency will shift the Aggregate Demand curve inward. (a) Reduction (b) Shock (c) Increase (d) Boom
Macroeconomics
21. Open Market Operations, Reserve Ratio, Discount Rate and Stabilization Securities are …. (a) Qualitative measures of monetary policy (b) Quantitative measures of monetary policy (c) Fiscal policy measures (d) None of the above.
22. If the Central Bank reduces the bank rate, this will cause …… (a) commercial banks to reduce lending (b) commercial banks to merge (c) money supply to increase (d) money supply to reduce
23. A change in the real value of wealth that causes spending to change when the level of prices changes is known as: (a) interest rate effect (b) International-Substitution effect (c) Consumption effect (d) Real Balance effect
24. If the economy is in an inflationary period, what action would Fiscal authority most likely take? (a) Decrease taxes (b) Decrease the discount rate (c) Increase government spending (d) Increase taxes
22. If the Central Bank reduces the bank rate, this will cause …… (a) commercial banks to reduce lending (b) commercial banks to merge (c) money supply to increase (d) money supply to reduce
23. A change in the real value of wealth that causes spending to change when the level of prices changes is known as: (a) interest rate effect (b) International-Substitution effect (c) Consumption effect (d) Real Balance effect
24. If the economy is in an inflationary period, what action would Fiscal authority most likely take? (a) Decrease taxes (b) Decrease the discount rate (c) Increase government spending (d) Increase taxes
Macroeconomics
16. In the short run money is neutral and in the long run money is not neutral (a) True (b) False
17. A currency is said to Depreciate if there is a fall in its market price due to market forces. As a result, the currency will buy less, foreign exchange in the foreign exchange market. (a) True (b) False
18. ……. expectation assumes that people form their expectations of inflation based on the inflation they have recently observed (a) Adaptive (b) Observed (c) Rational (d) Projected
19. The Balance of payments of a country is constructed on the principle of …. (a) Public sector accounting (b) Single-entry book-keeping (c) Reconciliation (d) Double-entry book-keeping
20. The main instruments of fiscal policy are: (a) CBN tools and Government project (b) Government expenditure and Tax rate (c) Government Budgets and Revenue (d) Interest rate and Bank rate
17. A currency is said to Depreciate if there is a fall in its market price due to market forces. As a result, the currency will buy less, foreign exchange in the foreign exchange market. (a) True (b) False
18. ……. expectation assumes that people form their expectations of inflation based on the inflation they have recently observed (a) Adaptive (b) Observed (c) Rational (d) Projected
19. The Balance of payments of a country is constructed on the principle of …. (a) Public sector accounting (b) Single-entry book-keeping (c) Reconciliation (d) Double-entry book-keeping
20. The main instruments of fiscal policy are: (a) CBN tools and Government project (b) Government expenditure and Tax rate (c) Government Budgets and Revenue (d) Interest rate and Bank rate
Macroeconomics
11. Unsustained…… occurs when prices in the goods and services market are high relative to resource prices and other costs (a) economic recession (b) economic boom (c) inflation (d) deflation
12. Why do people hold M1? (a) To earn interest on their money (b) To carryout transactions (c) As a hedge against inflation (d) As a means to have enough liquid assets to buy bonds and other securities
13. Decreases in Aggregate Demand lead to …… and …. (a) boom, full employment (b) recession, cyclical unemployment (c) boom, cyclical unemployment (d) recession, full employment
14. The type of expectation that asserts that individuals make use of both present and past information to make future predictions is ……… expectation (a) rational (b) future (c) speculative (d) anticipated
15. …. in the exchange rate value of the nation’s currency will shift the Aggregate Demand curve inward. (a) Reduction (b) Shock (c) Increase (d) Boom
12. Why do people hold M1? (a) To earn interest on their money (b) To carryout transactions (c) As a hedge against inflation (d) As a means to have enough liquid assets to buy bonds and other securities
13. Decreases in Aggregate Demand lead to …… and …. (a) boom, full employment (b) recession, cyclical unemployment (c) boom, cyclical unemployment (d) recession, full employment
14. The type of expectation that asserts that individuals make use of both present and past information to make future predictions is ……… expectation (a) rational (b) future (c) speculative (d) anticipated
15. …. in the exchange rate value of the nation’s currency will shift the Aggregate Demand curve inward. (a) Reduction (b) Shock (c) Increase (d) Boom
Macroeconomics
Explain the classical quantity theory of money
Macroeconomics
Which of the following contradicts the classical explanation of the economy?
[1] Voluntary unemployment.
[2] Frictional unemployment.
[3] Full employment.
[4] Involuntary unemployment.
[5] All of the above.
Macroeconomics
6. The level of output that can be sustained in the long run is called …. Output (a) potential (b) projected (c) expected (d) possible
7. The basic Automatic Stabilizers is/are: (a) Transfer payments (b) Unemployment compensation (c) Income taxes (d) All of the above
8. The market price of bonds can fluctuate depending on …. (a) how many bonds were sold (b) who bought the bonds (c) the amount of coupon (d) the interest rate
9. If the economy is in a recession, the Central Bank could do all of the following except …. (a) Buy securities (b) Lower the Discount rate (c) Lower the Monetary Policy rate (d) Lower taxes
10. If the Aggregate Supply is vertical in the long run neither monetary policy nor fiscal policy has any effect on aggregate output (a) True (b) False
7. The basic Automatic Stabilizers is/are: (a) Transfer payments (b) Unemployment compensation (c) Income taxes (d) All of the above
8. The market price of bonds can fluctuate depending on …. (a) how many bonds were sold (b) who bought the bonds (c) the amount of coupon (d) the interest rate
9. If the economy is in a recession, the Central Bank could do all of the following except …. (a) Buy securities (b) Lower the Discount rate (c) Lower the Monetary Policy rate (d) Lower taxes
10. If the Aggregate Supply is vertical in the long run neither monetary policy nor fiscal policy has any effect on aggregate output (a) True (b) False
Macroeconomics
4. The International Bank for Reconstruction and Development (IBRD) is also known as ….. (a) World Bank (b) IMF (c) African Development Bank (d) African Finance Corporation
5. Expansionary Fiscal policy is aimed at promoting: (a) Income redistribution and social justice (b) Full restoration of the economy from financial crisis (c) Output expansion and full employment (d) Price stability and product expansion
5. Expansionary Fiscal policy is aimed at promoting: (a) Income redistribution and social justice (b) Full restoration of the economy from financial crisis (c) Output expansion and full employment (d) Price stability and product expansion
Macroeconomics
a. If (inflation expectation t) = (inflation t-1), from the expectations-augmented Phillips curve it follows that, to bring the
unemployment rate below its natural level, policymakers must be willing to tolerate an
increase in the rate of inflation.
b. The smaller the fraction of wages indexed to the inflation rate, the larger the increase in
inflation associated with any given decrease in the rate of unemployment.
unemployment rate below its natural level, policymakers must be willing to tolerate an
increase in the rate of inflation.
b. The smaller the fraction of wages indexed to the inflation rate, the larger the increase in
inflation associated with any given decrease in the rate of unemployment.
