CBSE Guess > Papers > Important Questions > Class XII > 2011 > Economics > Economics By Mr. Pranab Sharma

CBSE CLASS XII

Economics (Revision/Self Assessment test)

page 9 of 11

81. Which of the following policies encourages economic growth?
    A) increased taxes on income and business profits B) reduction of government support of higher education
    C) high tariffs and strict import quotas on foreign-made products
    D) creation of tax free savings accounts
    E) limiting the years people spend in education so that they can start productive work
82. Money market mutual funds
    A) are included in M2 but not M1.
    B) are included in M1 but not M2.
    C) are included in M1 and M2.
    D) are the largest part of the monetary base.
    E) None of the above are correct.
83. Which of the following financial institutions does NOT have to meet minimum reserve ratios?

    i. the Fed
    ii. commercial banks
    iii. credit unions

    A) i only
    B) ii only
    C) iii only
    D) ii and iii
    E) i, ii, and iii
84. If the Fed increases the required reserve ratio, then
    A) banks' required reserves increase and their excess reserves decrease.
    B) bank customers become more willing to make deposits in banks.
    C) banks are able to make more loans.
    D) banks can buy more government securities.
    E) the Fed has supplied banks with more reserves.
85. If the Fed decreases the required reserve ratio, then
    A) banks' required reserves increase and their excess reserves decrease.
    B) bank customers become more willing to make deposits in banks.
    C) banks are able to make more loans.
    D) banks are forced to buy fewer government securities. E) banks' required reserves decrease and their excess reserves do not change.
86. If the Fed buys a $100,000 government security from a bank when the required reserve ratio is 20 percent and the currency drain is 5 percent, the bank can loan a maximum of
    A) $75,000.
    B) $80,000.
    C) $100,000.
    D) $95,000.
    E) $85,000.
87. If the Fed buys a $100,000 government security from a bank when the required reserve ratio is 10 percent and the currency drain is 50 percent, the bank can loan a maximum of
    A) $50,000.
    B) $40,000.
    C) $100,000.
    D) $90,000.
    E) $60,000.
88. If the Fed sells a $100,000 government security to a bank that initially had no excess reserves when the required reserve ratio is 20 percent and the currency drain is 5 percent, the bank must call in loans of
    A) $75,000.
    B) $80,000.
    C) $100,000.
    D) $95,000.
    E) $85,000.
89. An increase in the price level ________ the aggregate quantity supplied and ________ the aggregate quantity demanded.
    A) increases; increases
    B) increases; decreases
    C) decreases; increases
    D) decreases; decreases
    E) does not change; decreases
90. During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This increase in government expenditures on goods and services created
    A) a recessionary gap.
    B) an inflationary gap.
    C) a decrease in aggregate supply.
    D) a decrease in aggregate demand because consumers' expenditures decreased.
    E) an increase in potential GDP.

 

Submitted By Mr. Pranab Sharma
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