#1
Which institution acts as the lender of last resort in a country's banking system?
Central Bank
ExplanationCentral Bank provides emergency funds to banks in financial distress.
#2
What is the primary function of a commercial bank?
Providing loans and accepting deposits
ExplanationCommercial banks lend money and accept deposits from customers.
#3
Which of the following is NOT considered a function of money in an economy?
Producer of Goods
ExplanationMoney facilitates exchange, store of value, and unit of account, but it doesn't produce goods.
#4
What is the term for the rate at which one currency can be exchanged for another?
Exchange Rate
ExplanationExchange Rate represents the value of one currency in terms of another.
#5
What does the term 'Open Market Operations' refer to in the context of monetary policy?
Buying and selling of government securities by the central bank
ExplanationCentral bank trades government securities to influence money supply and interest rates.
#6
In the context of banking, what does the term 'Liquidity Ratio' measure?
The ratio of liquid assets to total assets
ExplanationLiquidity ratio assesses a bank's ability to meet short-term obligations with liquid assets.
#7
What is the term used to describe the interest rate at which the central bank lends to commercial banks?
Discount Rate
ExplanationDiscount Rate is the rate at which central banks provide loans to commercial banks.
#8
What is the term for the process of converting electronic data into unreadable code to secure transactions?
Encryption
ExplanationEncryption secures data by converting it into a code that can only be decoded by authorized parties.
#9
What is the function of the Federal Reserve System in the United States?
Implementation of monetary policy
ExplanationThe Federal Reserve System regulates the money supply and interest rates in the U.S. economy.
#10
Which of the following is NOT a function of a central bank?
Controlling fiscal policy
ExplanationCentral banks focus on monetary policy, not fiscal policy which is controlled by governments.
#11
Which of the following is NOT a function of the World Bank?
Promoting international trade
ExplanationThe World Bank focuses on providing financial and technical assistance for development projects, not directly promoting international trade.
#12
What does the term 'Quantitative Easing' involve?
Central banks buying long-term securities to increase money supply
ExplanationQuantitative Easing involves central banks purchasing long-term securities to inject money into the economy.