Question : Government borrowing to finance budget deficits ____________.
Option 1: will exert downward pressure on interest rates
Option 2: will not affect interest rates
Option 3: will increase the supply of loanable funds
Option 4: will put upward pressure on interest rates
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Correct Answer: will put upward pressure on interest rates
Solution : The correct answer is will put upward pressure on interest rates.
When a government's expenditure on goods, services, or transfer payments exceeds its tax collections, it has a budget deficit. Governments borrow money to cover budgetary shortfalls, and each time they do so, the national debt grows. Increased debt levels, depreciation of the currency, and inflation are all possible effects of a large budget imbalance. The result is an increase in the central bank's benchmark interest rates.
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Question : The Monetary Policy Committee maintained a hawkish stance on the interest rates. In this context, the 'hawkish stance' means_____.
Option 1: interest rates were decreased
Option 2: interest rates were increased
Option 3: interest rates were kept unchanged
Option 4: money supply was increased
Question : Which of these statements is true?
Option 1: At lower rates of interest, people will have a lower preference for liquidity.
Option 2: At higher rates of interest transactions, demand for money will be higher.
Option 3: At lower rates of interest, speculative demand for money will be higher.
Option 4: At higher rates of interest, the liquidity preference of people will increase.
Question : Which of the following statements is false?
Option 1: A decrease in interest rates will increase investment.
Option 2: An increase in investment can cause an increase in output.
Option 3: An increase in the savings in an economy can cause an increase in current output.
Option 4: A decrease in taxes can cause an increase in output.
Question : Hypertension is the term used for
Option 1: increase in heart rate
Option 2: decrease in heart rate
Option 3: decrease in blood pressure
Option 4: increase in blood pressure
Question : Which of the following statements is/are not correct?
I. Force per unit volume is called pressure. II. Liquids can exert pressure on the walls of containers. III. Force acting on an object can cause a change in its state of motion but not its shape.
Option 1: Only I and II
Option 2: Only III
Option 3: I, II and III
Option 4: Only I and III
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