#1
Which of the following is a primary function of a central bank?
Issuing currency
Regulating commercial banks
Managing government spending
Conducting monetary policy
#2
What is the primary objective of central banks in controlling inflation?
To keep prices stable
To increase government revenue
To stimulate economic growth
To reduce unemployment
#3
Which entity typically has the authority to issue legal tender currency?
Commercial banks
International Monetary Fund (IMF)
Treasury department of the government
World Bank
#4
What is the main purpose of the central bank's monetary policy?
To control the government's fiscal deficit
To stabilize employment levels
To regulate the money supply and interest rates
To promote international trade
#5
Which of the following is an example of a central bank's regulatory role?
Issuing currency
Conducting open market operations
Setting reserve requirements for banks
Providing loans to government
#6
What is the primary goal of a central bank's monetary policy?
Maximizing employment
Minimizing inflation
Balancing the government budget
Stabilizing exchange rates
#7
What does 'lender of last resort' mean in the context of central banking?
A bank that provides loans to individuals
A bank that lends to other banks in times of crisis
A bank that offers the highest interest rates
A bank that only lends to government institutions
#8
Which of the following is a tool used by central banks to control the money supply?
Fiscal policy
Open market operations
Foreign exchange market interventions
Corporate bond purchases
#9
What does the term 'open market operations' refer to in the context of central banking?
The buying and selling of government securities by the central bank
The regulation of stock markets by the government
The process of issuing new currency notes
The management of interest rates by commercial banks
#10
In the context of central banking, what does 'reserve requirement' mean?
The amount of money a bank must keep in its vaults
The percentage of deposits banks must hold in reserve
The interest rate at which central banks lend to commercial banks
The total amount of money in circulation in the economy
#11
What is the significance of the central bank's role as 'banker to the government'?
It provides loans to commercial banks
It manages government accounts and debt issuance
It regulates interest rates for government bonds
It offers financial services exclusively to government employees
#12
What is the function of the central bank's foreign exchange reserves?
To stabilize the exchange rate
To regulate inflation
To provide loans to foreign governments
To finance domestic infrastructure projects
#13
What is the function of the discount rate set by a central bank?
To regulate the exchange rate
To control inflation
To influence borrowing and lending by commercial banks
To manage government debt
#14
What is the main goal of quantitative easing, a policy sometimes implemented by central banks?
To reduce government spending
To increase interest rates
To expand the money supply
To decrease the money supply
#15
Which of the following is NOT a typical tool used by central banks to conduct monetary policy?
Open market operations
Reserve requirements
Taxation
Discount rate
#16
What is the significance of the central bank's independence from the government?
It allows the central bank to avoid accountability
It prevents political interference in monetary policy decisions
It enables the government to directly control interest rates
It restricts the central bank's ability to regulate banks
#17
Which of the following is a tool used by central banks to manage exchange rates?
Reserve requirements
Foreign exchange market interventions
Open market operations
Quantitative easing
#18
Which of the following statements best describes the concept of 'seigniorage'?
The fee paid by commercial banks to borrow from the central bank
The profit made by central banks from issuing currency
The process of setting interest rates for government bonds
The practice of printing money to finance government spending