Quiz # 17



#1 Lowering of value of currency relative to a foreign reference currency is called _________.

Devaluation. In modern monetary policy, a devaluation is an official lowering of thevalue of a country’s currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket.

#2 If cash reserve ratio decreases, credit creation will _______.

If the Cash Reserve Ratio (CRRis increased by the RBI, its impact on the expansion of credit creation will be to decrease it.

#3 The goods which people consume more, when their price rises are called _______.

A Giffen good is a good for which demand increases as the price increases, and falls when the price decreases.

#4 Stagflation is defined as –

A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation and a decline in Gross Domestic Product (GDP).

#5 Movement along the supply curve is known as ______ .

A movement along the supply curve will occur when the price of the good changes and the quantity supplied changes in accordance to the original supply relationship. In other words, a movement alongs the supply curve is known as Expansion and Contraction of supply.

September 21, 2019

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