National Fiscal and Monetary Policy - Lecture 4

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1. Which of the following is an effect of lowering Interest rates?

  • Improves external value of currency.
  • Cheaper borrowing, meaning less incentive to save.
  • More expensive loans, meaning larger projects discouraged.
  • Expensive borrowing, meaning more incentive to save.
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2. What is the Monetary Policy?

  • Controlling the money supply and interest rates.
  • Controlling the government spending and tax.
  • Controlling the money supply and tax.
  • Controlling the interest rates and tax.

3. What is the definition of 'Fiscal Policy'?

  • Changing the level of money supply and tax.
  • Changing the level of money supply and interest rates.
  • Changing the level of government spending and tax.
  • Changing the level of government spending as interest rates.

4. Deflation can be due to:

  • Hyperinflation.
  • Increased competition, Technological Advancements, Supply outweighing Demand.
  • High economy growth.
  • Increased competition, Technological Advancements, Demand outweighing Supply.

5. Which of the following is a cause of Inflation?

  • Civil unrest.
  • Reduced costs of raw materials.
  • Cheaper borrowing or tax cuts, leads to higher prices and wages.
  • Equal supply to demand.

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