761. The parable of Riding a Switchback suggest that stabilizing policy ?
A. is not sufficiently stimulating or contracting the economy at any time
B. is effective
C. is stimulating or contracting the economy at the wrong times
D. is desirable

762. As the required reserve ratio is decreased the money multiplier ?
A. could either increase or decrease
B. decrease
C. increase
D. remain the same, as long as bank hold no excess reserves

763. Automatic stabilisers act to ____ government expenditures and ____ government revenues during recessions ?
A. increase: increase
B. decrease; decrease
C. increase; decrease
D. decrease; increase

764. The negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher income brackets during an expansion is ?
A. debt burden
B. the Laffer curves
C. bracket creep
D. fiscal drag

765. Time lags which often erode effectiveness of monetary and fiscal policy measures represent ?
A. delays in the response of the economy is stabilization policy
B. the foreign response to price changes
C. the change in exports and imports prices
D. the change in exchange rates

766. The response lag of stabilization policy represents ?
A. the time that it takes for policy makers to recognize the existence of boom of bust
B. the time needed for parliament to agree to a tax cut.
C. the time that is necessary to put the desired policy into effect
D. the time that it takes for the economy to adjust to the new conditions after a new policy has been implemented

767. The multiple by which total deposits can increase for every pound increase in reserves is the ?
A. Money multiplier
B. liquidity ratio
C. bank’s line of credit
D. required reserve ratio

768. The idea that the money supply should change to accommodate changes in aggregate demand is associated with the idea of ?
A. Margaret Thatcher
B. Ronald Reagan
C. Milton Friedman
D. John Maynard Keynes

769. By financial crowding out economist mean ?
A. credit rationing
B. government borrowing drives up interest rates
C. Bank of England controls on commercial bank lending
D. what the government borrows cannot be used for private investment

770. If the state Bank of Pakistan wished to pursue an expansionary monetary policy it would ?
A. increase the minimum reserve asset ratio.
B. buy government securities on the open market
C. raise interest rates
D. sell government securities on the open market

 

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