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LO5:
Analyze the relevant economic indicators that relate to the operations of the
company. Evaluate the impact of the economic environment on the business.

 

25.     In
times of low ________ agents have more incentive to ________ and are less
interested in ________.

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a.     Nominal
interest rates; lend money; borrowing money

b.    Real
interest rates; lend money; borrowing money

c.     Real
interest rates; borrow money; lending money

d.    market;
lend money; borrowing money

 

26.     In
case an agent transfers money from a currency account to a demand deposit
account,

a.     The
M1 decreases while the M2 does not change

b.    The
M1 does not change while the M2 increases

c.     The
M1 does not change and the M2 does not change

d.    The
M1 increases and the M2 does not change

 

27.    In a system with floating
interest rates, if the demand for Canadian dollars in the UAE increases, which
of the following will most likely occur?

a.    The price of Canadian
goods in UAE dirhams will increase

b.    The price of UAE goods in
Canadian dollars will increase

c.     There will be an increase
in the deficit of the balance-of-payments in the UAE

d.    The price of Canadian dollars
in UAE dirhams will decrease

 

28.    The value of the simple
spending multiplier will increase if:

a.     The government expenditure
increases

b.    The government
unemployment benefits decrease

c.     The marginal propensity to
consume decreases

d.    The marginal propensity
to save decreases

 

29.    It is common to associate hyperinflation
to a situation where:

a.     The labor productivity
increases

b.    The total spending
decreases

c.     The foreign currency
depreciates

d.    The money supply grows
rapidly

 

30.    In case of unanticipated
inflation, the situation:

a.     Will benefit fixed income
earners

b.    Will benefit consumers

c.     Will benefit debtors

d.    Will benefit savers

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