Which of the following statements about money is not true ?

Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in cu

A debit card is not really money because it is only a means of transferring money between accounts

All the wealth that people hold, in whatever form, should be considered as money

Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in cu

In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not

Which of the following policy actions by a central bank is likely to increase the money supply ?

Increasing reserve requirements

Increasing the refinancing rate

All of these will increase the money supply

Buying government bonds in open market operations

Increasing reserve requirements

Which of the following is included in broad money, but not included in narrow money ?

Automatic-transfer savings accounts

Which of the following events will lead to a decrease in the equilibrium interest rate ?

A sale of government securities by the central bank

An increase in the level of aggregate output

An increase in the discount rate

Which of the following events will lead to an increase in the demand for money ?

An increase in the interest rate

An increase in the level of aggregate output

An increase in the supply of money

Which of the following activities is one of the responsibilities of the Bank of England to the banking system ?

Auditing the various agencies and department of the government

Assisting Banks that are in a difficult financial position

Auditing the various agencies and department of the government

Loaning money to other countries that are friendly to the UK.

Issuing new bonds to finance the PSBR.

When the money supply increase ?

the economy moves up the LM curve

The LM curves shifts to the left

The economy moves down the LM curve

The LM curve shift to the right

When economies speak of the demand for money which of the following are they asking ?

How much cash do you wish you could have?

How much wealth would you like?

How much income would you like to earn?

What proportion of your financial assets do you want to hold in non-interest-bearing forms

Three variables affect the demand for money they are _______ and __________?

The time of year bank opening hours the price level

bank opening hours, the proportion of weekly paid employee’s interest rates

the price level interest rates real income

The time of year bank opening hours the price level

The proportion of weekly paid employees the time of year real income

The three main tools of monetary policy are ?

The money supply, government purchases and taxation

fiat, commodity and deposit money

Open-market operations reserve requirements and the refinancing rate

The money supply, government purchases and taxation

Government expenditures taxation and reserve requirements

Coin, currency and demand deposits

The refinancing rate is ?

He interests rate banks pay on the public’s deposits

The interest rate at Which commercial banks lend to and borrow from each other

The interest rate the European Central Bank pays on reserves

The interest rates the public pays when borrowing from banks

The interest rates the European Central Bank charges on loans to banks

He interests rate banks pay on the public’s deposits

The primary function of bank is to ?

Provide a cheque clearing system

Provide notes and coins for trade

Provide a cheque clearing system

The money supply is ?

State Bank of Pakistan Issue Department

Money + bank cards + credit cards

Cheques + money + bank cards + credit cards

Currency in circulation plus bank deposits

The monetary base is ________ and _________?

retail sight deposits building society deposits

bank deposits, building society deposits

Currency in circulation, banks cash reserves

retail sight deposits building society deposits

retail deposits, wholesale deposits

is determined in the goods market and has no influences on the money market

is determined in the goods market and influences the level of planned investment and thus the money market

is determined in the money market and influences the level of planned investment and thus the goods market

is determined in the goods market and has no influences on the money market

is determined in the money market and has no influence on the goods market

The demand for money represents the idea that there is ?

a positive relationship between the interest rate and the quantity of money demanded

a negative relationship between the price level and the quantity of money demanded

a negative relationship between the level of aggregate output and the quantity of money demanded

a negative relationship between the interest rate and the quantity of money demanded

The chain of events that results from an expansionary monetary policy is ?

money supply increases the interest rate increase planned investment increases aggregate output increases and money demand increases

aggregate output increases the demand for money increase the interest rate increase planned investment

money supply increases the interest rate decrease planned investment increases aggregate output increases and money demand increase

money supply increases the interest rate increase planned investment increases aggregate output increases and money demand increases

money demand increases the interest rate decreases planned investment increases aggregate output increases and money demand increases

The value of all coins and currency in circulation at any time

Anything that is generally accepted as a medium of exchange

Money has 3 main function they are __________ and __________?

IOU , inflation hedge store of value

Medium of exchange inflation hedge store of value

Medium of exchange unit of account IOU

Medium of exchange unit of account store of value

M4 is a __________ measure of money and includes deposits at both __________ and _________?

narrow, banks, building societies

wide, banks insurance companies

Narrow, banks insurance companies

In terms of the demand for money the interest rate represents ?

the return on money that is saved for the future

the rate at which current consumption can be exchanged for future consumption

The opportunity cost of holding money

the return on money that is saved for the future

If there is a general shortage of liquidity in the money market then ?

The banks will increase their lending

The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will fall and the central bank may be expect

The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will rise and the long-term interest rate ma

the long-term interest rate in the economy will rise and the central bank will raise its interest rate in response

The short-term interest rate at which the economy’s commercial banks lend to and borrow from each other will rise and the central bank may be expect

If the investment demand curve is vertical ?

both monetary and fiscal policy are effective

both monetary and fiscal policy are ineffective

monetary policy is effective but fiscal policy is ineffective

monetary policy is ineffective but fiscal policy is effective

both monetary and fiscal policy are effective

If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?

be replaced by foreign investment

not be reduced as much as it would have been

be replaced by foreign investment

be replaced by consumer spending

67 + Mcqs in Money in Economics Page 1 McqOptions

1.	Which of the following statements about money is not true ?
A.	A debit card is not really money because it is only a means of transferring money between accounts
B.	All the wealth that people hold, in whatever form, should be considered as money
C.	Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in cu
D.	In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not
Answer» C. Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in cu

3.	Which of the following is not a function of money ?
A.	hedge against inflation
B.	Medium of exchange
C.	unit of account
D.	Store of value
Answer» B. Medium of exchange

4.	Which of the following is included in broad money, but not included in narrow money ?
A.	savings accounts
B.	Travelers checks
C.	Currency held outside banks
D.	Automatic-transfer savings accounts
Answer» B. Travelers checks

9.	When real income increases other things equal we can expect the demand for real money holdings to ?
A.	fall
B.	not change
C.	increase
D.	None of these
Answer» D. None of these

10.	When interest rate rise, other things equal, we can expect the quantity of real money holding to ?
A.	fall
B.	increase
C.	not change
D.	None of these
Answer» B. increase

13.	The way in which government spending is supposed to reduce investment is by increasing ?
A.	incomes
B.	overseas investment
C.	imports
D.	interest rates
Answer» E.

16.	The primary function of bank is to ?
A.	Control the money supply
B.	Provide notes and coins for trade
C.	Make a profit
D.	Provide a cheque clearing system
Answer» D. Provide a cheque clearing system

17.	The opportunity cost of holding money is determined by ?
A.	the discount rates
B.	the level of aggregate output
C.	the interest rates
D.	the inflation rates
Answer» D. the inflation rates

18.	The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
A.	Transactions motive
B.	precautionary motive
C.	profit motive
D.	speculation motive
Answer» E.

21.	The main reason that people hold money to buy things is referred to as the ?
A.	Profit motive
B.	Precautionary motive
C.	Transactions motive
D.	speculation motive
Answer» D. speculation motive

22.	The interest rate ?
A.	is determined in the goods market and influences the level of planned investment and thus the money market
B.	is determined in the money market and influences the level of planned investment and thus the goods market
C.	is determined in the goods market and has no influences on the money market
D.	is determined in the money market and has no influence on the goods market
Answer» C. is determined in the goods market and has no influences on the money market

24.	The idea the government spending causes a reduction in private investment is called ?
A.	fiscal drag
B.	investment blight
C.	crowding-out
D.	the Thatcher effects
Answer» D. the Thatcher effects

26.	The difference between a bank’s actual reserves and its required reserves is its?
A.	required reserve ratio
B.	profit margin
C.	excess reserves
D.	net worth
Answer» D. net worth

37.	Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be __________ and the LM curve must be __________?
A.	flat; steep
B.	flat; flat
C.	steep; flat
D.	steep; steep
Answer» B. flat; flat

23.	The interest rate is determined in ?
A.	the money and labor markets
B.	the goods and labor markets
C.	the goods market
D.	the money markets
Answer» E.

25.	The equilibrium level of aggregate output is determined in ?
A.	the goods and labor markets.
B.	the goods market
C.	the money markets
D.	the money and labor market
Answer» C. the money markets

28.	The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the ?
A.	money supply curve
B.	LM curve
C.	money demand curve
D.	IS curve
Answer» C. money demand curve

29.	The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ?
A.	aggregate supply curve
B.	LM curve
C.	aggregate demand curve
D.	IS curve
Answer» C. aggregate demand curve

31.	Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?
A.	assets
B.	deposits
C.	loans
D.	government bonds
Answer» C. loans

32.	One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?
A.	rise; increase, increase
B.	rise, falls, increase
C.	rise, increase, falls
D.	rise, falls, falls
Answer» E.

33.	Money that a government has required has required to be accepted in settlement of debts is ?
A.	barter money
B.	currency value
C.	legal tender
D.	commodity money
Answer» D. commodity money

34.	Money is ?
A.	The value of all coins and currency in circulation at any time
B.	Anything that is generally accepted as a medium of exchange
C.	The same as income
D.	All of the above
Answer» C. The same as income

38.	In terms of the demand for money the interest rate represents ?
A.	the rate at which current consumption can be exchanged for future consumption
B.	the price of borrowing money
C.	The opportunity cost of holding money
D.	the return on money that is saved for the future
Answer» D. the return on money that is saved for the future

40.	If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?
A.	change in a certain direction
B.	remain constant
C.	fall
D.	rise
Answer» E.

Explore topic-wise MCQs in Economics.

Which of the following statements about money is not true ?

Which of the following policy actions by a central bank is likely to increase the money supply ?

Which of the following is not a function of money ?

Which of the following is included in broad money, but not included in narrow money ?

Which of the following events will lead to a decrease in the equilibrium interest rate ?

Which of the following events will lead to an increase in the demand for money ?

Which of the following activities is one of the responsibilities of the Bank of England to the banking system ?

When the money supply increase ?

When real income increases other things equal we can expect the demand for real money holdings to ?

When interest rate rise, other things equal, we can expect the quantity of real money holding to ?

When economies speak of the demand for money which of the following are they asking ?

Three variables affect the demand for money they are _______ and __________?

The way in which government spending is supposed to reduce investment is by increasing ?

The three main tools of monetary policy are ?

The refinancing rate is ?

The primary function of bank is to ?

The opportunity cost of holding money is determined by ?

The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?

The money supply is ?

The monetary base is ________ and _________?

The main reason that people hold money to buy things is referred to as the ?

The interest rate ?

The interest rate is determined in ?

The idea the government spending causes a reduction in private investment is called ?

The equilibrium level of aggregate output is determined in ?

The difference between a bank’s actual reserves and its required reserves is its?

The demand for money represents the idea that there is ?

The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the ?

The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ?

The chain of events that results from an expansionary monetary policy is ?

Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?

One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?

Money that a government has required has required to be accepted in settlement of debts is ?

Money is ?

Money has 3 main function they are __________ and __________?

M4 is a __________ measure of money and includes deposits at both __________ and _________?

Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be __________ and the LM curve must be __________?

In terms of the demand for money the interest rate represents ?

If there is a general shortage of liquidity in the money market then ?

If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?

If the keep some money available in case I see a bargain this is an example of ?

If the investment demand curve is vertical ?

If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, _________ will occur?

If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?

If the central bank buys financial securities in the open market to increase the monetary base, this is and example of ?

If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ?

If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?

If banks and the private sector decide to hold less cash the money multiplier will be ?

Government Securities with terms of more than one year are called ?

For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?

Three variables affect the demand for money they are _ and ____?

The monetary base is and _?

One of the transmission mechanisms of monetary policy is through consumer demand when interest rates household wealth and consumption _?

Money has 3 main function they are and ?

M4 is a measure of money and includes deposits at both and _?

Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be and the LM curve must be ?

41.	If the keep some money available in case I see a bargain this is an example of ?
A.	asset demand for money
B.	transactions demand for money
C.	token demand for money
D.	precautionary demand for money
Answer» E.

43.	If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, _________ will occur?
A.	a hyperinflation
B.	a depression
C.	stagflation
D.	a recession
Answer» B. a depression

44.	If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?
A.	Suffer even more
B.	not be reduced as much as it would have been
C.	be replaced by foreign investment
D.	be replaced by consumer spending
Answer» C. be replaced by foreign investment

45.	If the central bank buys financial securities in the open market to increase the monetary base, this is and example of ?
A.	lender of less resort
B.	financial intermediation
C.	Open Market operations
D.	Financial regulation
Answer» D. Financial regulation

47.	If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?
A.	be reduced
B.	not be affected
C.	fall to zero
D.	be increased
Answer» E.

48.	If banks and the private sector decide to hold less cash the money multiplier will be ?
A.	Unchanged
B.	Larger
C.	Smaller
D.	Unstable
Answer» C. Smaller

49.	Government Securities with terms of more than one year are called ?
A.	bills of exchanges
B.	government bonds
C.	Treasury bills
D.	Capital bills
Answer» C. Treasury bills

50.	For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?
A.	decrease the money supply
B.	increase the money supply
C.	increase the demand for money
D.	decrease the demand for money
Answer» C. increase the demand for money