#1
What is the definition of interest rate?
The rate at which the central bank lends money to commercial banks
The rate at which commercial banks lend money to individuals or businesses
The rate at which individuals or businesses lend money to commercial banks
The rate at which individuals or businesses borrow money from the central bank
#2
Which of the following is not a tool used by central banks to influence interest rates?
Open market operations
Reserve requirements
Fiscal policy
Discount rate
#3
What is the term for the interest rate set by the Federal Reserve to lend money to other banks?
Federal funds rate
Prime rate
LIBOR
Discount rate
#4
Which of the following factors does NOT typically influence interest rates?
Supply and demand for credit
Economic growth
Government fiscal policy
Population demographics
#5
What is the term for the interest rate charged by banks to their most creditworthy customers?
Federal funds rate
Prime rate
LIBOR
Discount rate
#6
Which of the following is NOT a component of the nominal interest rate?
Real interest rate
Inflation premium
Default risk premium
Expected return
#7
What is the Fisher effect in economics?
The inverse relationship between inflation and interest rates
The relationship between the money supply and inflation
The relationship between nominal interest rates, real interest rates, and inflation
The effect of government spending on aggregate demand
#8
What is the term for the interest rate that banks charge each other for overnight loans?
Federal funds rate
Prime rate
Discount rate
LIBOR
#9
What does the term 'yield curve' refer to in finance?
A graph showing the relationship between bond maturity and yield
A measure of a company's profitability
The process of calculating interest payments on loans
A technique used to estimate future interest rates
#10
What is the term for a situation where short-term interest rates are higher than long-term rates?
Inverted yield curve
Flat yield curve
Normal yield curve
Steep yield curve
#11
What is the term for the practice of buying a financial asset with borrowed money?
Leverage
Hedging
Arbitrage
Derivatives
#12
What is the term for the interest rate adjusted for inflation?
Nominal interest rate
Real interest rate
Effective interest rate
Federal funds rate
#13
Which of the following accurately describes the relationship between interest rates and bond prices?
Inverse relationship
Direct relationship
No relationship
Dependent on economic conditions
#14
Which of the following is NOT a potential effect of an increase in interest rates?
Decrease in consumer spending
Increase in bond prices
Decrease in business investment
Decrease in housing affordability
#15
What is the term for a central bank's buying and selling of government securities in the open market to control the money supply?
Quantitative easing
Fiscal policy
Monetary policy
Reserve requirements
#16
Which of the following is a characteristic of negative interest rates?
Encourages saving over spending
Stimulates economic growth
Increases borrowing costs for businesses
Reduces the profitability of banks
#17
Which of the following is NOT a tool commonly used by central banks to implement monetary policy?
Open market operations
Forward guidance
Quantitative easing
Fiscal policy