If quantity of money increases 100%, other things remaining constant, value of money changes by:

1. 1. Increases by 100%
   2. Decreases by 200%
   3. Decreases by 100%
   4. Does not change

When banks prepare their balance sheets, they show the money lent in _____.

1. 1. Liability
   2. Assets
   3. Both assets and liabilities
   4. None of these

The power of a bank to create credit is affected by _____.

1. 1. The cash reserve requirement
   2. The amount of cash available
   3. The number of branches of a bank
   4. (a) and (b) above

Velocity of circulation of money means _____.

1. 1. The number of times a unit of money changes hands daily
   2. The number of times a unit of money changes hands monthly
   3. The number of times a unit of money changes value
   4. The number of times a unit of money changes hands annually

Government of Pakistan issues currency on the basis of _____.

1. 1. Tax collection
   2. Availability of gold in the country
   3. Availability of dollars in the country
   4. Demand for money in the country

Economic development is measured on the basis of _____.

1. 1. increase in real GNP
   2. increase in nominal GNP
   3. increase in personal incomes
   4. increase in government revenue

According to Keynes, demand for money is affected by _____.

1. 1. Income
   2. Rate of interest
   3. Literacy rate
   4. (a) and (b) above

If quantity of money is doubled, then according to Quantity Theory, value of money is _____.

1. 1. Half
   2. Double
   3. Remains constant
   4. None of these

Which is the most widely used tool of monetary policy?

1. 1. Clearing house
   2. Discount rate
   3. Issuing of notes
   4. Open-market operations

When a central bank wants to increase money supply in circulation, it _____.

1. 1. purchase govt. securities
   2. lowers bank rate
   3. directs banks to advance more loans
   4. (a) and (b) above