Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Economics (CFA520): - Question Paper

is 50 MUC. If the currency deposit ratio is 0.20 and the central bank specifies a reserve ratio of 5%,
money supply in the economy will be
(2 marks)
(a) 5,000 MUC
(b) 5,500 MUC
(c) 6,000 MUC
(d) 6,550 MUC
(e) 6,600 MUC.
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55. Which of the subsequent does not affect the balance sheet of Reserve Bank of India?
(1 mark)
(a) Central government’s borrowings from RBI
(b) Loan taken by 1 commercial bank from the other
(c) Refinancing of NABARD loans
(d) Increase in reserves of commercial banks
(e) Increase in net foreign exchange assets.
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56. An important difference ranging from the approaches of the Classical economists and Keynesian economists < ans
to achieve a macroeconomic equilibrium is that
(1 mark)
(a) Keynesian economists actively promote the use of fiscal policy while the classical economists do
not
(b) Keynesian economists actively promote the use of monetary policy to improve aggregate
economic performance while classical economists do not
(c) Classical economists believe that monetary policy will certainly affect the level of output while
Keynesians believe that money growth affects only prices
(d) Classical economists believe that fiscal policy is an effective tool for achieving economic
stability while Keynesians do not
(e) Keynesian economists actively promote the use of rational expectations while the classical
economists do not.
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57. Which of the subsequent is actual for a classical aggregate supply curve?
(1 mark)
(a) Aggregate supply curve is horizontal
(b) Aggregate supply curve is positively related to real output
(c) Aggregate supply curve is negatively related to real output
(d) Aggregate supply curve is unrelated to price level
(e) Aggregate supply curve is rectangular hyperbola.
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58. According to Keynesian theory, full employment refers to a situation where there is
(1 mark)
(a) Zero unemployment
(b) Natural rate of unemployment
(c) lowest demand for labor
(d) lowest supply of labor
(e) Demand for goods which is less than supply.
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59. The Chief Economist to the Government told the Cabinet that the people cannot be influenced if the

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