Economics Practice MCQ Page 32

Multiple Choice questions for Economics in the sets of 10 each on one page with questions and answers. All sets are useful in the preparation of subject tests for employment or admission.
Question: 1824   The most liquid type of bank account is the
  1. time deposit.
  2. saving deposit.
  3. certificate deposit.
  4. demand deposit.
  5. automatic deposit.
Question: 1825   The key concept of the quantity theory of money is that.
  1. only a commodity -money standard can prevent inflation.
  2. the value of money is determined by the quantity of money in circulation.
  3. V and Q are money fixed in the long run.
  4. inflation can only happen if an economy produces too few goods.
Question: 1827   An increase in the money supply leads to an increase in the price level which causes
  1. an increase in money demand .
  2. a future increase in the money supply.
  3. a decrease in real GDP.
  4. a decline in nominal interest rates.
Question: 1829   The opportunity cost of holding money is
  1. liquidity.
  2. security from risk.
  3. the capability to make transactions.
  4. interest.
  5. all of the above.
Question: 1830   When you hold money because you expect to spend it later in the day,you are holding money because of the
  1. speculative motive.
  2. unit-of-value motive.
  3. transactions motive.
  4. standard-of -deferred -payment motive.
  5. precautionary motive.
Question: 1831   If you always keep $100 in your checking account in case you encounter an exceptionally good bargain,you hold this money because of the
  1. speculative motive.
  2. unit-of -value motive.
  3. transactions motive.
  4. standard-of -deferred -payment motive.
  5. precautionary motive.
Question: 1832   Which of the following is most likely to cause an increase in the quantity of money demanded?
  1. A reduction in the interest rate.
  2. An increase in inflation.
  3. A reduction in the price level.
  4. A reduction in real output.
  5. A reduction in nominal income.
Question: 1833   When there is a general excess demand for money in the economy,
  1. the supply of money rises automatically.
  2. price may fall to reduce the demand for money .
  3. real output generally rises.
  4. the economy cannot return to equilibrium.
  5. the government must increase the supply of money.
Question: 1834   According to the modern quantity theory ,inflation will result whenever
  1. the money supply grows faster than nominal income.
  2. money demand grows faster than money supply .
  3. money supply grows faster than money demand.
  4. the money supply grows .
  5. the money supply grows faster than the price level.
Question: 1835   An increase in market interest rates will
  1. reduce prices of all bonds.
  2. reduce prices of government bonds.
  3. reduce prices of municipal bonds.
  4. increase prices of all bonds.
  5. increase prices of municipal bonds.
Question: 1836   The real interest rate measures the
  1. anticipated rate of inflation.
  2. opportunity cost of spending verses saving.
  3. sum of the nominal interest rate and anticipated inflation.
  4. amount of cash you must actually pay when is borrowed.
Question: 1837   The demand for money(LP curve) shifts in response to changes in the
  1. opportunity cost of holding money.
  2. nominal interest rate.
  3. price of money.
  4. real GDP.

Answers to the questions of Economics on this page

Following list gives the correct choice for the answer of the Economics mcqs.
1824 . D       1825 . B       1827 . A       1829 . D       1830 . C       1831 . E       1832 . E       1833 . B       1834 . C       1835 . A       1836 . B       1837 . D      

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