If money is non-interest bearing, what impact will an increase in inflation have on the demand for real money balances?
a. reduce the demand for real money balances
b. increase the demand for real money balances
c. have no effect on the demand for real money balances
d. have an ambiguous effect on the demand
e. none of the above.

If the demand for money is reduced relative to GDP this also implies:
a. velocity decreases
b. velocity increases.
c. velocity stays unchanged
d. anything can happen to velocity
e. velocity is reduced by exactly one-half

In the short run a reduction in the rate of growth of the money supply may cause the following:
a. higher prices
b. lower real interest rates
c. a recession
d. a change in the slope of the short-run Phillips curve
e. none of the above

If a central bank is targeting the money supply and there is an increase in real economic growth (and hence an increase in the demand for money) what is likely to happen to the nominal interest rate?
a. interest rate falls
b. interest rate rises
c. anything can happen
d. no change in the interest rate

A customer comes into Bank A and deposits $800 in cash. The legal reserve ration is 0.2. Assuming no cash drain, what will be the final total of deposits when the initial $800 has worked it's way through the banking system?
a. 2000
b. 4000
c. 3200
d. 1600
e. none of the above

In the short run, an increase in the money supply may cause the following:
a. lower prices
b. a rise in unemployment
c. a fall in money wages
d. a fall in unemployment
e. none of the above

If nominal income increases and the central bank is trying to hold nominal interest rates constant, what will likely happen to the money supply?
a. fall
b. remain unchanged
c. not enough info to determine
d. rise
e. none of the above

#If you have any other info about this subject , Please add it free.#

Your name: E-mail: Telphone: Your comments: If you have any other info about Economics MCQ's. With explanations if possible.? , Please add it free.