Question

QUESTION 4 

In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): 

contractionary monetary policy to contain inflation. 

expansionary monetary policy to contain inflation. 

expansionary monetary policy to fight unemployment. 

contractionary monetary policy to fight unemployment 

QUESTION 5 

When the economy is sluggish, the Fed will: 

raise interest rates, which will decrease the money supply, which will then decrease consumption, investment and net exports. 

lower interest rates, which will increase the money supply, which will then increase consumption, investment and net exports

Decrease the money supply, which will raise interest rates, which will then decrease consumption, investment and net exports 

increase the money supply, which will lower interest rates, which will then increase consumption investment and net exports

QUESTION 9 

An increase in real GDP affects the demand for money because 

the larger real GDP, the higher the real interest rate. 

when real GDP increases, more money is needed to make expenditures. 

tax payments rise because more income is earned 

at the higher price level, it takes more dollars to make expenditures 

there is an inverse relationship between the quantity money demanded and nominal GDP 

QUESTION 10 

An increase in the price level leads to a 

rightward shift in the demand for money curve. 

leftward shift in the demand for money curve 

movement downward along the demand for money curve and no shift of the curve. 

movement upward along the demand for money curve and no shift of the curve. 

rightward shift of the supply of money curve.

Answer 1

4. The South African central bank is using contradictory monetary policy to fight inflation. In such a policy, the bank raise interest rates so that credit becomes expensive and the economy slows down. This reduces the rate of inflation.

5. If the Fed wants to tackle sluggish economic growth, it will lower the interest rates, which will increase the money supply and then increase investment consumption and net exports.

9. When real GDP increase, more money is needed to make expenditures. This increase the money demanded for transaction purposes.

10. An increase in the price level leads to a rightward shift in the demand for money curve. This is because more money is needed to make expenditures.