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Quantitative Easing refers to the Central Bank
Selling bonds to raise finance for spending by the govenment
Buying back bonds to increase bank liquidity to encourage lending

In Keynesian theory, houiseholds hold money for three reasons. Which of the three is affected by movements in interest-rates?
Precautionary motive
Transactions motive
Speculative motive

In the monetary transmission mechanism, assume the government increases money supply. Interest-rates fall. Investment is expected to rise. According to which school of thought would investment be more sensitive to an intetest-rate fall?
The Classical and monetarist schools of thought
The Keynisan school of thought

Assume that the reserve requirement set by the Central Bank is 20%. Deposits increase by $100. What will the total increase in deposits be after the money market multiplier has worked through?
$80
$1000
$500

Assume, as in previous question, that the reserve requirement set by the Central Bank is 20%. Deposits increase by $100. What will the total increase in advances/loands be after the money market multiplier has worked through?
$500
$400

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Experienced teacher of micro- and macro-economics

Tests Created: 11

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