Question

Answer true or false

6- In an open economy a reduction in the government deficit should be accompanied with an improvement of current account

7- Even an economy with limited financial participation, monetary policy may influence the real economy。

8-In Lucas misperception model, unanticipated monetary policy shocks have real effects due to asymmetrical information

9- More frequent switching from bonds to money will result in a higher opportunity cost of holding money and lower money management costs

10- If people think that interest rates are above normal levels, they will want to hold bonds in anticipation of a rise in bond prices。

Answer 1

Answer 6 - false

Reason - in an open economy a reduction in fiscal deficit should be accompanied with an improvement in current account

Answer 7 - true

Reason - due to change in monetary policy therevis change in total reserves Which affects the bank reserves due to which supply of loans in private banks also gets affected. So if the limited Number of people and households depend on bansk lending Then its obvious that aggregate demand and inflation will get affected

Answer 8 - True

Reason - Due to asymmetric information , In lucus misperception model unanticipated momey supply changes affected thw real Economic system.

Answer 9 - False

Reason - there will be increase in money management costs as a result of which you will get a lower opportunity codt due to holding smaller amount of money