25) the first step of Quantitative Easing? 1 Graph E 2) Graph F 3) Graph G 4) Gr

Question

25) the first step of Quantitative Easing? 1 Graph E 2) Graph F 3) Graph G 4) Graph H 5) [not enough information to answer] 26) a credit crunch? Graph E 2) Graph F 3Graph G 4) Graph H 5) not enough information to answer 27) a requirement for makes to extend loans to disadvantaged borrowers, as part of a policy to stimulate economic activity in underprivileged areas? Graph E 2) Graph F 3 Graph G 4) Graph H 5) [not enough information to answer] 28) a minimum rate of interest, instituted to ensure that retirees receive a fair return above current market-failure rates? Graph E 2) Graph F 3 Graph G 4) Graph H 5) [not enough information to answer] 29) a ban on foreign deposits in domestic banks? 1 Graph E 2) Graph F 3) Graph G 4) Graph H 5) [not enough information to answer]

Explanation / Answer

25) In quantitate easing the money supply increases and this is represented by graph C where money supply increases and interest rate falls. Thus the answer is option 5.

26) A credit crunch is a situation when there is sudden lack of money supply in the economy. The money supply decreases and rate of interest increases in this case. This is shown by graph D. So the answer is option 5.

27) To extend loans money supply needs to be increased. This is shown by graph C. Money supply curve increases and interest rate falls. Thus the answer is option is 5.

28) Setting a minimum rate of interest is like setting a price floor. This is shown by graph E. The minimum rate of interest should be above the equilibrium to be binding. Thus answer is option 1

29) A ban on foreign deposits will reduce the deposits in Indian banks which will reduce the supply of money in the economy. This is shown by graph F where there is excess demand for money. Thus answer is 2.

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