macro economics

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  • Created by: amit
  • Created on: 21-04-15 21:22

1. Deflating a nominal quantity is the process of dividing a ____ quantity by a ______ in order to express the quantity in ______ terms.

  • real; price index; nominal
  • nominal; price index; real
  • nominal; nominal quantity; real
  • nominal; real quantity; nominal
  • real; nominal quantity; real
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2. Banks hold reserves:

  • to meet depositor withdrawals and payments
  • to earn interest
  • to increase profits
  • to escape the double coincidence of wants
  • only because the government requires them to hold reserves.

3. If the actual reserve/deposit ratio equals 8% and the desired reserve/deposit ratio for this bank is 10%, the bank should:

  • stop making loans.
  • make more loans in order to earn interest.
  • send the extra reserves to the central bank.
  • do nothing because this is a profitable situation.
  • request that customers withdraw deposits from the bank.

4. A situation of negative inflation is called:

  • disinflation.
  • recession.
  • expansion.
  • deflation.
  • boom.

5. If consumption increases by €9 when after-tax disposable income increases by €10, the marginal propensity to consume equals:

  • 0.9
  • 10.0
  • 1.0
  • 0.1
  • 9.0

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