Question : When the rate of interest is at its maximum, which of the following will follow?

Option 1: The demand for bonds will be at its minimum.

Option 2: The speculative demand for money will be zero.

Option 3: The speculative demand for money will be at its maximum.

Option 4: The speculative demand for money will be equal to the supply of money.

Question : Which of the following statements is/are correct regarding the liquidity trap?

i. It is where speculative demand for money is infinitely inelastic and the liquidity preference curve becomes perfectly elastic.
ii. It is where speculative demand for money is infinitely elastic and the liquidity preference curve becomes perfectly inelastic.
iii. It is the point where speculative demand for money is infinitely elastic and the liquidity preference curve becomes perfectly elastic.
iv. It is the point where speculative demand for money and the liquidity preference curves are not related.

Option 1: Only Statement ii is correct

Option 2: Only Statement iii is correct

Option 3: Only Statement iv is correct

Option 4: Only Statements i and ii are correct

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

Question : When the general interest rate reaches a low level, which of the following statements will be correct?

Option 1: Most people will expect the interest rate to rise in the future.

Option 2: Most people will prefer to hold bonds.

Option 3: Most people will speculate a further decline in the rate of interest.

Option 4: Any increase in the money supply will cause the interest rate to fall further.

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