Quelpr

Monetary Theory and Policy · CAPE Economics Unit 2

84 past-paper questions on Monetary Theory and Policy, part of Macroeconomic Problems and Policies, from every CAPE Economics Unit 2 paper on Quelpr.

Practise Monetary Theory and Policy
  1. 6(a)(i)1 mark· CAPE Economics Unit 2 · 2006 · Paper 1Define the term 'money'.
  2. 6(a)(ii)2 marks· CAPE Economics Unit 2 · 2006 · Paper 1Distinguish between fiat money and commodity money.
  3. 6(b)3 marks· CAPE Economics Unit 2 · 2006 · Paper 1State THREE functions of money.
  4. 7(a)2 marks· CAPE Economics Unit 2 · 2006 · Paper 1Explain the term 'the demand for money'.
  5. 7(b)4 marks· CAPE Economics Unit 2 · 2006 · Paper 1Differentiate between M1 and M2.
  6. 8(a)2 marks· CAPE Economics Unit 2 · 2006 · Paper 1Define the term 'monetary policy'.
  7. 8(b)2 marks· CAPE Economics Unit 2 · 2006 · Paper 1Explain the MAIN goal of an expansionary monetary policy.
  8. 8(c)2 marks· CAPE Economics Unit 2 · 2006 · Paper 1List TWO tools used by the Central Bank to control the money supply.
  9. 2(b)(ii)9 marks· CAPE Economics Unit 2 · 2006 · Paper 2Using aggregate demand and aggregate supply curves to illustrate your points, discuss the impacts on price level (P) and equilibrium GDP (Y) in the short run of an increase in the money supply during a period of high…
  10. 4(a)(i)6 marks· CAPE Economics Unit 2 · 2006 · Paper 2Discuss TWO advantages of paper money.
  11. 4(a)(ii)6 marks· CAPE Economics Unit 2 · 2006 · Paper 2Discuss TWO advantages of cheques as compared to commodity money.
  12. 4(a)(iii)6 marks· CAPE Economics Unit 2 · 2006 · Paper 2Discuss TWO disadvantages of commodity money.
  13. 4(b)12 marks· CAPE Economics Unit 2 · 2006 · Paper 2Discuss the role of acceptability and fiat or law in determining the value of money.
  14. 4(c)(i)8 marks· CAPE Economics Unit 2 · 2006 · Paper 2Discuss the basic determinant of the transactions demand for money and the speculative demand for money.
  15. 4(c)(ii)12 marks· CAPE Economics Unit 2 · 2006 · Paper 2Assume that the money market is initially in equilibrium and that the money supply is increased. With the use of a diagram, explain the adjustments toward a new equilibrium interest rate.
  16. 3(a)10 marks· CAPE Economics Unit 2 · 2007 · Paper 2Explain how commercial banks 'create' money.
  17. 3(b)5 marks· CAPE Economics Unit 2 · 2007 · Paper 2State what the money multiplier is and how it is calculated.
  18. 3(c)(i)2 marks· CAPE Economics Unit 2 · 2007 · Paper 2What is 'fiat money'?
  19. 3(c)(ii)3 marks· CAPE Economics Unit 2 · 2007 · Paper 2List the three main functions of money.
  20. 3(c)(iii)2 marks· CAPE Economics Unit 2 · 2007 · Paper 2List three desirable characteristics of money.
  21. 3(c)(iv)3 marks· CAPE Economics Unit 2 · 2007 · Paper 2State three reasons why people hold money.
  22. 3(d)15 marks· CAPE Economics Unit 2 · 2007 · Paper 2Identify four main instruments of monetary control used by Central Banks and explain why each of these may not always be effective in the context of the Caribbean.
  23. 3(e)10 marks· CAPE Economics Unit 2 · 2007 · Paper 2Discuss why residents in many Caribbean countries choose to save in US currency rather than that of their own country.
  24. 4(a)25 marks· CAPE Economics Unit 2 · 2007 · Paper 2Using a graph showing the theory of liquidity preference, explain how monetary policy can be used to increase the level of output and employment in an economy.
  25. 3(a)(i)2 marks· CAPE Economics Unit 2 · 2008 · Paper 2Define 'money' in economic terms.
  26. 3(a)(ii)6 marks· CAPE Economics Unit 2 · 2008 · Paper 2State THREE functions of money.
  27. 3(b)16 marks· CAPE Economics Unit 2 · 2008 · Paper 2Describe FOUR tools used by the Central Bank to influence the supply of money.
  28. 3(c)(i)4 marks· CAPE Economics Unit 2 · 2008 · Paper 2Explain what is meant by the 'money multiplier'.
  29. 3(c)(ii)12 marks· CAPE Economics Unit 2 · 2008 · Paper 2Outline the first FOUR rounds in the process by which banks create money, assuming an initial deposit of $100 and a required reserve ratio of 10%.
  30. 3(d)(i)2 marks· CAPE Economics Unit 2 · 2008 · Paper 2State the equation for the quantity theory of money.
  31. 3(d)(ii)8 marks· CAPE Economics Unit 2 · 2008 · Paper 2State what EACH symbol in the quantity theory of money equation represents.
  32. 4(a)(i)5 marks· CAPE Economics Unit 2 · 2008 · Paper 2Explain how monetary policy can have a positive impact on inflation.
  33. 4(a)(ii)5 marks· CAPE Economics Unit 2 · 2008 · Paper 2Explain how monetary policy can have a positive impact on aggregate demand.
  34. 4(a)(iii)5 marks· CAPE Economics Unit 2 · 2008 · Paper 2Explain how monetary policy can have a positive impact on unemployment.
  35. 3(a)(i)2 marks· CAPE Economics Unit 2 · 2009 · Paper 2Define M1.
  36. 3(a)(ii)2 marks· CAPE Economics Unit 2 · 2009 · Paper 2Define M2.
  37. 3(a)(iii)2 marks· CAPE Economics Unit 2 · 2009 · Paper 2Define monetary transmission mechanism.
  38. 3(a)(iv)2 marks· CAPE Economics Unit 2 · 2009 · Paper 2Define velocity of money.
  39. 3(a)(v)2 marks· CAPE Economics Unit 2 · 2009 · Paper 2Define currency substitution.
  40. 3(b)6 marks· CAPE Economics Unit 2 · 2009 · Paper 2State THREE reasons for holding money.
  41. 3(c)16 marks· CAPE Economics Unit 2 · 2009 · Paper 2Identify FOUR tools of monetary policy and explain how Central Banks in the Caribbean region can use these tools to help control inflation.
  42. 3(d)8 marks· CAPE Economics Unit 2 · 2009 · Paper 2Use the Keynesian liquidity preference framework to illustrate how monetary policies can impact on interest rates and the demand for money.
  43. 3(e)10 marks· CAPE Economics Unit 2 · 2009 · Paper 2With the use of examples, outline TWO reasons why Central Bank monetary policies to combat inflation may only achieve limited success.
  44. 3(a)(i)1 mark· CAPE Economics Unit 2 · 2010 · Paper 2Define 'money'.
  45. 3(a)(ii)6 marks· CAPE Economics Unit 2 · 2010 · Paper 2Outline THREE functions of money.
  46. 3(b)(i)3 marks· CAPE Economics Unit 2 · 2010 · Paper 2Explain what is meant by a 'fractional reserve banking system'.
  47. 3(b)(ii)6 marks· CAPE Economics Unit 2 · 2010 · Paper 2Starting with an initial deposit of $100 and given a required reserve ratio of 10 per cent, explain how commercial banks use this system to create money.
  48. 3(c)(i)3 marks· CAPE Economics Unit 2 · 2010 · Paper 2Explain how a shortening of the pay period for workers affects the transactions demand for money and the equilibrium interest rate.
  49. 3(c)(ii)3 marks· CAPE Economics Unit 2 · 2010 · Paper 2Explain how an increase in the nominal gross domestic product affects the transactions demand for money and the equilibrium interest rate.
  50. 3(c)(iii)3 marks· CAPE Economics Unit 2 · 2010 · Paper 2Explain how an increase in the number of automated teller machines throughout the country affects the transactions demand for money and the equilibrium interest rate.
  51. 3(a)6 marks· CAPE Economics Unit 2 · 2011 · Paper 2Describe three types of demand for money.
  52. 3(b)(i)2 marks· CAPE Economics Unit 2 · 2011 · Paper 2Define the reserve requirement (RR) as a tool of monetary policy.
  53. 3(b)(ii)2 marks· CAPE Economics Unit 2 · 2011 · Paper 2Define open market operations (OMO) as a tool of monetary policy.
  54. 3(b)(iii)2 marks· CAPE Economics Unit 2 · 2011 · Paper 2Define moral suasion (MS) as a tool of monetary policy.
  55. 3(c)4 marks· CAPE Economics Unit 2 · 2011 · Paper 2Explain how the Central Bank can use monetary policy to have a positive impact on aggregate demand.
  56. 3(d)(i)3 marks· CAPE Economics Unit 2 · 2011 · Paper 2State the 'quantity theory of money'.
  57. 3(d)(ii)1 mark· CAPE Economics Unit 2 · 2011 · Paper 2Identify the school of economics that advocates the use of the quantity theory.
  58. 3(e)5 marks· CAPE Economics Unit 2 · 2011 · Paper 2Analyse how changes in the money supply by the Central Bank can lead to inflation.
  59. 3(c)3 marks· CAPE Economics Unit 2 · 2012 · Paper 2Explain how expansionary monetary policy may be used, instead of fiscal policy, to increase employment in the economy.
  60. 4(b)(i)3 marks· CAPE Economics Unit 2 · 2012 · Paper 2Outline THREE limitations of Monetary policy.
  61. 3(a)(i)1 mark· CAPE Economics Unit 2 · 2013 · Paper 2Define the term 'money'.
  62. 3(a)(ii)2 marks· CAPE Economics Unit 2 · 2013 · Paper 2Briefly describe TWO types of money.
  63. 3(a)(iii)2 marks· CAPE Economics Unit 2 · 2013 · Paper 2Distinguish between M1 and M2.
  64. 3(b)12 marks· CAPE Economics Unit 2 · 2013 · Paper 2Discuss THREE tools of monetary policy that any Central Bank in the Caribbean region can use to help control inflation.
  65. 3(c)8 marks· CAPE Economics Unit 2 · 2013 · Paper 2Use the Keynesian liquidity preference framework to illustrate how the contractionary policies discussed in 3 (b) will impact interest rates and the demand for money.
  66. 2(a)(ii)2 marks· CAPE Economics Unit 2 · 2014 · Paper 2Define the macroeconomic variable 'Interest rate'.
  67. 3(a)(i)2 marks· CAPE Economics Unit 2 · 2014 · Paper 2Define the concept 'Velocity of money'.
  68. 3(a)(ii)2 marks· CAPE Economics Unit 2 · 2014 · Paper 2Define the concept 'Currency substitution'.
  69. 3(a)(iii)2 marks· CAPE Economics Unit 2 · 2014 · Paper 2Define the concept 'Monetary transmission mechanism'.
  70. 3(b)6 marks· CAPE Economics Unit 2 · 2014 · Paper 2Outline THREE reasons for holding money or THREE types of demand for money.
  71. 3(c)5 marks· CAPE Economics Unit 2 · 2014 · Paper 2Assess how the Central Bank can use monetary policy to positively impact aggregate demand.
  72. 3(d)8 marks· CAPE Economics Unit 2 · 2014 · Paper 2Discuss TWO reasons why the Central Bank's policy options to combat inflation may achieve only limited success.
  73. 4(c)(i)2 marks· CAPE Economics Unit 2 · 2014 · Paper 2Define the term 'fractional reserve banking system'.
  74. 4(c)(ii)7 marks· CAPE Economics Unit 2 · 2014 · Paper 2With the use of an example, describe how commercial banks use a 'fractional reserve banking system' to create money.
  75. 4(b)(i)4 marks· CAPE Economics Unit 2 · 2015 · Paper 2Analyse how monetary policy can be used to address the problem of recession or slow growth.
  76. 4(b)(ii)4 marks· CAPE Economics Unit 2 · 2015 · Paper 2Analyse how monetary policy can be used to address inflation.
  77. 4(a)(i)3 marks· CAPE Economics Unit 2 · 2016 · Paper 2State THREE functions of money.
  78. 4(a)(ii)4 marks· CAPE Economics Unit 2 · 2016 · Paper 2Outline TWO motives for holding money.
  79. 4(c)4 marks· CAPE Economics Unit 2 · 2016 · Paper 2Outline TWO ways in which a surplus of money affects the money market.
  80. 2(c)12 marks· CAPE Economics Unit 2 · 2017 · Paper 2Discuss THREE tools of monetary policy that Central Banks can use to help control inflation.
  81. 2(b)2 marks· CAPE Economics Unit 2 · 2018 · Paper 2State TWO limitations of monetary policy.
  82. 2(d)8 marks· CAPE Economics Unit 2 · 2018 · Paper 2Analyse how the money market responds to BOTH a shortage of money and a surplus of money.
  83. 2(a)4 marks· CAPE Economics Unit 2 · 2021 · Paper 2List FOUR instruments of monetary policy.
  84. 2(b)(i)3 marks· CAPE Economics Unit 2 · 2021 · Paper 2Explain the statement: 'Cigarettes are not generally considered as money.'

Related topics in Macroeconomic Problems and Policies