Macroeconomics exams

What is the main function of the central banks in creating money?

• Providing loans to individuals

• Guaranteeing for the private banking system

• Regulating the stock market

• Issuing government securities

What is the purpose of Quantitative Easing (QE) as a monetary policy?

• To increase the money supply

• To regulate the stock market

• To decrease the money supply

• To control inflation

What does the IS curve represent in the IS-LM model?

• The relationship between money demand and money supply

• The relationship between interest rates and income

• The impact of government expenditure on aggregate demand

• The impact of taxes on disposable income

What happens to the LM curve when there is an increase in money demand?

• It remains unchanged

• It shifts up

• It becomes steeper

• It shifts down

What is the main goal of the Quantitative Theory of Money?

• To control the money supply

• To influence real variables in the economy

• To regulate the stock market

• To stabilize the exchange rate

What is the effect of an increase in government expenditure on the IS curve?

• It remains unchanged

• It shifts right

• It shifts left

• It becomes steeper

What does the LM curve represent in the IS-LM model?

• The relationship between interest rates and income

• The impact of government expenditure on aggregate demand

• The impact of taxes on disposable income

• The relationship between money demand and money supply

What is the impact of a decrease in money supply on the LM curve?

• It becomes steeper

• It shifts down

• It shifts up

• It remains unchanged

What is the equilibrium point in the IS-LM model?

• Where the government expenditure is at its peak

• Where the interest rates are at their highest

• Where the money supply equals the money demand

• Where the IS curve intersects the LM curve

What is the purpose of the Neutrality of Money theory?

• To stabilize the exchange rate

• To regulate the stock market

• To influence nominal variables in the economy

• To control the money supply