#1
What is the role of central banks in monetary systems?
Issuing currency only
Regulating money supply and interest rates
Providing loans to commercial banks
Managing government expenditures
#2
Which economic concept refers to the increase in the general price level of goods and services?
Deflation
Stagflation
Inflation
Recession
#3
What is the main function of commercial banks in a monetary system?
Issuing currency
Regulating interest rates
Providing loans and accepting deposits
Controlling government expenditures
#4
What does the term 'liquidity' refer to in economics?
The ease with which an asset can be converted into cash
The total amount of money in circulation
The profitability of an investment
The level of government debt
#5
What is the term for a situation where the economy experiences both high inflation and high unemployment?
Stagflation
Hyperinflation
Deflation
Recession
#6
What does the term 'fiat money' refer to in monetary systems?
Money backed by a physical commodity
Money that can be easily counterfeited
Money that derives its value from government decree
Money used exclusively for international trade
#7
In the context of monetary policy, what does 'open market operations' involve?
Regulating interest rates by buying or selling government securities
Setting reserve requirements for commercial banks
Directly controlling the money supply
Establishing exchange rate policies
#8
What is the primary tool used by central banks to control the money supply?
Open market operations
Changing reserve requirements
Setting interest rates
Government spending
#9
Which of the following is a characteristic of a 'fractional reserve banking' system?
Banks are required to hold a fraction of their deposits as reserves
Banks can issue unlimited amounts of currency
Banks are not required to hold any reserves
Banks are prohibited from lending money
#10
What is the term for the interest rate at which the central bank lends to commercial banks?
Prime rate
Federal funds rate
Discount rate
LIBOR
#11
What is the 'quantity theory of money' primarily focused on?
The relationship between money supply and inflation
The impact of fiscal policy on economic growth
The role of central banks in financial stability
The effects of technological advancements on productivity
#12
What is the significance of the 'Taylor Rule' in monetary policy?
It determines the optimal level of government debt
It prescribes the appropriate level of taxation
It provides a guideline for central banks in setting interest rates
It regulates the exchange rate mechanism
#13
Which monetary policy tool involves adjusting the reserve requirement for banks?
Open market operations
Quantitative easing
Reserve ratio manipulation
Discount rate
#14
What is the term for a sudden and widespread decline in the value of a currency?
Hyperinflation
Depreciation
Devaluation
Currency crisis
#15
What is the term for the practice of increasing the money supply rapidly to cover government deficits?
Quantitative tightening
Inflation targeting
Seigniorage
Money laundering